we cant eat our dollars and have it...

We cant eat our dollars and have it.

Its not as if we really have a choice in the matter.

Naira is "tied" to fx earnings....as oil prices crashed...the naira has weakened.

We have ONLY 2 Monetary options

A. Devalue. ...then allow the market determine the true exchange value....the effect is our fx reserves are safe.....and imports fall.....exports are better in this regard.

Or

B. Defend the Naira. ...and allow the CBN determine the exchange value of the the naira....the effect is our fx reserves are depleted.....and imports rise....

Its from these 2 option we must choose, sure we can do a hybrid here and there but its really down to "devalue" or "defend"..none of them solves the problem completely.

The problem is the CBN...wants to defend the naira...and also retain her reserves....A mismatch.

We have to look at this holistically. .CBN alone cant "defend" the Naira....if imports fall...Naira will rise.The real culprit in this matter are imports....

So the questions is how do you reduce imports?

we have to find a medium and short term solution to reduce imports by either import substitution or massive local subsidies to ensure local goods are cheaper.

Take textiles. ...how is it possible i can go to China, buy Ankara, ship it, pay insurance and bank charges and it lands in Lagos cheaper than the same Ankara from a textile mill in Kaduna?

The answer is simple, we have high local production costs so imports are cheaper...because imports are cheaper, it has a high demand, thus Nigerians seek dollars to import...because imported goods sell more......because they are cheaper.

So thinking out of the box, go to Kaduna and give the textile mills diesel at N5 a litre....their costs will drop...so no one will buy Chinese textiles because Kaduna textiles is cheaper....

This is the same thing the West does, they subsize farmers so their food is cheaper, and exported even Boeing and Airbus jets are locally subsidized.

However note....subsidize LOCAL production. ...

So in closing, let get imaginative and expand the response, dollar restrictions wont help the naira...its just speed bumps. ..the ONLY real way to have a strong naira is reducing imports.

(If we want a strong Naira is another topic)

Its our problem, we can fix it