Why you should not save naira now
By Udesinanna Stephen
The economic situation of Nigeria is alarming and calls for serious practical attention. Still, when one studies to ascertain the situation, it has been a load of in-depth analysis that the ordinary Nigerian struggles to understand. Let us go simple. Why the increasing cost of products? I am not an economist to offer diverse analysis, but I promise it will be simple.
Generally, it has been concluded that the increasing cost of dollars is provoking the rising cost of commodities. How? The dollar is an international currency, so Nigerian importers need it to import goods, considering that we consume more foreign products.
As of the time of this report, 1 dollar is marketed for N1,250; instead of buying $1 for N1, importers spend an extra 1,249 naira for a dollar. So when the Marketer says the phone is no longer N70,000 but N90,000, it means the dollar just got expensive; hence, more naira is needed to buy the dollar not the goods (phone); where is the more naira coming from? From the pocket of all those purchasing foreign goods? This means you’re not just paying for the commodity, you’re paying the cost of dollars, which is used to import the goods you purchased. You’re paying the price to maintain your country’s currency.
Why not dump the naira and start using the dollars? Honestly, it will solve the problem because we will skip exchange costs in that we don’t need to buy dollars, we just go straight and import. However, no government will do such, a country’s currency is part of her independence and pride, therefore the naira is our pride.
Why is the naira depreciating? We produce little to export, so very few foreigners need our naira to buy goods in Nigeria; the lesser the demand for naira, the poorer it becomes. The persons who collected our importers’ naira can’t use it to do much, so we have to compensate them with more naira.
Why you should not save naira now
Saving naira in the bank is a risk because it is diminishing; the value of a legal tender (money) is not the digit (N200, N500) but what it can purchase. For example, in 2023, a big-sized coca cola drink is N200. I can buy 5 bottles for N1,000 then. Today, it’s 250, meaning I can only buy 4 bottles with N1,000 now, so the worth of that 1,000 naira has diminished; that’s the same analog for other goods.
These are not just paper figures. They are real in our daily dealings.