FACTORS TO BE CONSIDERED TO RESTORE THE VALUE OF NAIRA:
AN OPEN COUNSEL TO THE PRESIDENT OF NIGERIA, HIS EXCELLENCY, ASIWAJU BOLA AHMED TINUBU.
By Abubakar Zulkarnaini, BSc Political Science, Kaduna State University.
Abu.zul86@gmail.com
8th February, 2024
SOME KEY FACTORS:
INDUSTRIALIZATION FOR NIGERIA’S POTENTIAL:
Industrialization holds the key to unleashing Nigeria’s full potential. Strengthening the economy involves investing in industries, promoting local production, and incorporating mechanized farming systems to reduce dependence on imports, with a particular focus on agriculture.
FACTORS OF PRODUCTION:
The factors of production—land, labor, capital, and entrepreneurship—are the building blocks of an economy, essential for generating income and fostering economic growth.
REVIVING THE ECONOMY:
1. Increase investment.
2. Provide direct capital injections through investments, loans, and grants.
3. Inject capital into the banking system to spur investment.
4. Increase activity through public-private partnership structures.
5. Attract incoming foreign direct investment (FDI) and prevent the loss of outgoing FDI.
SOLVING NIGERIA’S ECONOMIC CRISIS:
Collaborative efforts between well-to-do individuals and the government are crucial. Creating an enabling environment for philanthropy, offering incentives for private sector support, and promoting social causes, including the integration of mechanized farming, can contribute to economic recovery.
ECONOMIC FACTORS:
Economic factors influencing households and organizations include economic growth, unemployment percentage, inflation, interest and exchange rates, and commodity prices (such as oil, steel, and gold).
MAINTAINING A FIXED EXCHANGE RATE:
To maintain a fixed exchange rate, the central bank intervenes by selling foreign exchange to buy domestic currency, decreasing the domestic money supply and restoring equilibrium.
CENTRAL BANK TECHNIQUES FOR EXCHANGE RATE STABILITY:
1. Indirect method: Change domestic money supply.
2. Direct method: Intervene in the foreign exchange market by buying or selling currency.
Central banks also manage currencies by issuing new currency, setting interest rates, managing foreign currency reserves, and promoting mechanized farming.
STABILIZING CURRENCY:
Methods to solve a currency crisis include implementing floating exchange rates, adopting market-friendly monetary policies, attracting foreign investment through government policies, and purchasing its own currency.
CAUSES OF CURRENCY APPRECIATION:
Currency appreciation can result from investor sentiments, lower inflation rates, political stability, current account status, recession, government trade policies, terms of trade, speculation, etc.
INTEREST RATES AND CURRENCY STABILITY:
Increasing interest rates in the short term enhances the appeal of domestic assets, making loans more expensive and discouraging borrowing. This strategy reduces the money supply, preventing inflation, and safeguarding the currency’s value.
RESTORING STABILITY OF ELECTRICITY
This is a major dimension measured and comprerd by investors before investing in a country, the government need to focus on how to improve the stability of electricity either by hydroelectric system, solar system, wind turbine system or uranium electricity system.
Most investors are worried on their daily utility bill especially if depending on AGO, CNG, LPFO and AGO.
Lastly, mechanized farming also boosts the economy and enhances currency appreciation mainly during the exportation of goods.
Mechanized farming can be a key driver of economic development by increasing efficiency, crop yield, and overall agricultural productivity. It enhances food security, generates employment, and contributes to rural development, fostering economic growth through a modernized and sustainable agricultural sector.
