On Thursday, Daily Trust reported that government security operatives from the Department of State Services (DSS) were raiding black market spots across Lagos and Abuja in a bid to drive down the dollar-to-naira exchange rate.
According to a black marketer who spoke with Reuters, “the police and state security service officials are raiding black marketers in Lagos and Abuja to compel an appreciation of the naira.”
This action by the government basically shows that the Buhari administration lacks a fundamental understanding of economic matters. President Buhari and members of his administration need to understand that actions like this can plunge the country into a deeper mess than it already is in.
The government has on several occasions applied brute force when making economic decisions, which has really not worked. Earlier this year, it placed a ban on access to foreign exchange for the importation of 41 items. This happened when the revenue of the country dropped as a result of the fall in oil prices. This action has evidently yielded no positive results. In August this year, he introduced the War Against Indiscipline (WAI) because he felt Nigerians are not disciplined.
It clearly shows that you cannot teach an old dog new trick. This is simply history repeating itself again. In the 80s, when President Buhari ruled Nigeria as General Buhari, he applied similar methods to cause the naira to fall but it led to more harm than good. He was an anti-free market man. He tried to prevent currency devaluation by banning the import of certain goods and used military intimidation to keep the prices of goods from rising in the market. The Koboko-inspired price control consequently caused scarcity, and Nigerians had to queue for basic commodities that were readily available before the price increase.
Despite his efforts, Nigeria’s economy still crashed. During his time as a military dictator, he struggled to come up with a viable economic plan. He put austerity measures in place to save the economy but instead it made it difficult for local industries to procure essential imported raw materials. This led many of the industries to close shops and laying-off workers. Everything happening to Nigeria’s economy in 2016 is déjà vu for people who lived through Buhari’s regime in 1984.
This administration needs to work on its policies as opposed to using force to make archaic policies work. The fact that it is easier to get foreign currencies through the black market than it is from banks should tell the government something. Employing brute force to influence the forex rates is not the way to go.