avido's recent analysis of the Nigerian economy is absolutely correct. Reno's is a layman economists trying to defend the policy of President Tinubu's floating monetary policy regime that have destroyed the naira and worsen the socio-economic variables of income, purchasing power, unemployment and increase the monetary poverty index in Nigeria. The strength of a nation is her currency in relation to the other basket of currencies, which eventually determines the nation's purchasing power parity. Reno's argument of a naira-subsidy is an American economic imperialism promoted through IMF and World Bank. Throughout the British Empire till the late 70s, the naira was much more valuable than the British Pound, the US dollar, and the German Deutschmark. The steady collapse of the naira since the 1970s till date was a consequence of the wrongheaded monetary policies of the succeeding governments in Nigeria adopted from the US-led neoliberal institutions such as the IMF and World Bank as conditions for international loans and financing.

The naira is among the worst-performing currency in the world since 2023. The radical decline of the naira is a direct consequence of President Tinubu's floating rate monetary policy regime. As a nation, you don't adopt a floating rate regime when the central bank could only supply less than 25% of the liquidity needed to sustain the currency market. As an import-based economy, when you adopted a floating rate regime, you traded off monetary policy autonomy, which would result in currency instability and worsening the monetary poverty index. The adoption of a market-led exchange rate to implement the subsidy removal policy and the unification of the exchange rate are the biggest failures of President Tinubu's administration. It has led to the collapse of the purchasing power of millions of Nigerians that are now experiencing monetary poverty. President Tinubu's economic reform would have been implemented with a fixed rate regime. If these policies are not reversed, the naira, which was N430 to a dollar in 2023, may be exchanged for N2500 to a dollar before June 2025.

The Nigerian cost of governance is among the highest in the world. Nigeria must reduce the cost of governance to strengthen the naira. A country that is spending about 45% of its expected revenue in 2024 on debt servicing should adopt sound fiscal spending to create economic sustainability. The UK is the 5th largest economy in the world with a GDP of $3.34 trillion, yet the Member of Parliament receives a monthly income of about £7600. Germany is the 4th largest economy in the world with a GDP of $4.7 trillion, yet the Member of Parliament receives a monthly income of about 11,233 euros. In Nigeria, with a GDP of about $200 billion, the Member of Parliament total monthly earning is about $30,000, which is maintains through persistence borrowing from the international community. President Tinubu has just requested additional borrowing of $2.2 billion to support the 2024 budget, even when it is just 40 days to the end of 2024. Most borrowings from the IMF and World Bank this year were spent on consumption and recurrent expenditure rather than investing in economic activities that would improve government revenue. A sustainable economy cannot be built when governments constantly engage in borrowing for consumption. If Nigeria must strengthen the naira and reduce the monetary poverty index in the country, the government must adopt a fixed-rate currency regime, formulate policies to de-dollarize the economy, radically reduce the cost of governance, and adopt capital control to involve in sustainable borrowing that supports economic activities that would improve the internally-generated-revenue of the country.

Festus Tokunbo. Academic Support & Development Economists. Ulster University, United Kingdom. Email; [email protected]