COMPARATIVE ANALYSIS OF THE UNDERDEVELOPMENT, RESOURCE AND ECONOMIC SCARCITY IN CONTEMPORARY NIGERIA

INTRODUCTION

Underdevelopment has plunged its elongated claws into the beating heart of the Nigerian system, effectively corrupting the life source of the political body and leaving it lifeless. Nigeria has gone through various stages of metamorphosis, but unlike the circle of life where everything moves forward, Nigeria seems to be retrogressing.

Resource and economic scarcity, comrade-in-arms, have hammered the final nails into the coffin waiting for the day when Nigeria will finally become a failed state.

Therefore, in this article, a comparison will be drawn between the economy of the immediate post-colonial era, and the present Nigeria, including some foreign countries, how demonetization can benefit the Nigerian economy, and the factors of underdevelopment, resource and economic scarcity in Nigeria.

UNDERDEVELOPMENT IN CONTEMPORARY NIGERIA

According to Walter Rodney, underdevelopment largely consists of two elements: the comparative aspect and the interaction between exploitation, that is, exploitation between two countries .

An underdeveloped country can be briefly defined as “a country that is not as economically or politically advanced as the main industrial powers.” Developing countries are located mostly in Africa, Asia, Eastern Europe, the Middle East, and Latin and South America which are also termed “developing states, underdeveloped countries, less- developed countries, and Third World countries.”

In the same vein, scarcity is a term used to describe finite resources, or the perception of limited resources, when there is not enough to fulfil human needs and wants .

COMPARISON BETWEEN THE ECONOMY OF THE IMMEDIATE POST-COLONIAL ERA, THE PRESENT NIGERIA AND THAT OF OTHER FOREIGN COUNTRIES

1. THE NIGERIAN CURRENCY:

The first factor to be compared is the dying currency that has been dyed — naira. Nigeria once used the Nigerian Pound, which had taken the role of the antiquated West African Shilling. The Nigerian Pound was replaced in 1973 by the naira (N), where one naira equated ten UK shillings. Chief Obafemi Awolowo oversaw the change in currencies and came up with the pun-intentional moniker “naira;” the largest denomination was changed to ten naira. The twenty naira note, featuring the image of General Murtala Ramat Mohammed, first appeared in 1977. Several notes were introduced over the years, culminating in the thousand naira note that is still in use today.

The Nigerian Pound was worth zero dollars and seventy-one cents in 1960. However, following the introduction of naira, one naira was equivalent to zero dollars and sixty-two cents. The impending collapse of the naira was signalled by the Babangida dictatorship in 1985, when one naira was worth one dollar seventy-five cents. One dollar was worth twenty-two naira in 1994 as a result of the inherently imperial policies implemented by the dictatorship under the supervision of the International Monetary Fund and World Bank.

The fourth republic saw a ridiculous devaluation of the naira in 2004 where one dollar was worth one hundred and thirty-two naira, eighty-nine kobo. One dollar was exchanged for one hundred and ninety-nine naira following the passing of the presidential gavel from President Goodluck Jonathan to President Muhammadu Buhari in May 2015. With the extreme waste and inefficiency that characterized that administration, if the currency sector had been a requirement for re-election, President Buhari would not have won. Yet, when he won again in 2019, the naira collapsed and one dollar was worth three hundred and sixty naira as soon as he ascended his position of power . Presently, naira is treading dangerously toward being a thousand naira denomination compared to a dollar.

Once the value of the purchasing power in a country has been weakened, then it is pertinent that a lot of other issues follow suit.

2. THE INFLATION OF FUEL PRICE:

Currently, another challenge asphyxiating the common man is the price of fuel. From the late 1970s (about 1978) to the early 1990s (about 1992), fuel traversed the margins of zero naira and some kobo. Most people would want to assume that at that period, the price was considerably large as it is in today’s time, but it was not. As at that period, fifty naira was the highest denomination, and buying fuel did not take one quarter of the highest denomination. During the General Abacha’s regime, the price of fuel —like everything else— climbed to eleven naira per litre. Considering the strength of the naira in the 90s, eleven naira was infinitesimal to the money in circulation.

With the transition of power to a civilian government, the slow ascension of the price of fuel began: twenty naira, twenty-two naira, twenty-six naira; thirty naira, forty naira, fifty-five naira; sixty naira, sixty-six naira up to seventy naira.

The hallmark of good governance was when the price fell back to sixty-five naira under the tenure of President Umaru Musa Yar’adua. After his sad death, a price hike occurred, fixing the price of fuel at one hundred and twenty naira compared to the prior sixty-five naira. Since then, there has been no stutter or glitch in its prices, it has just been a progressive movement in a geometric form.

Currently, the price of fuel is uncertain. And just to make abnormal profits, some stations dispense fuel at the price of six hundred and twenty naira per litre, others, five hundred and seventy naira. This is in stark contradistinction with the earlier era of fuel in Nigeria’s emergence.

3. INFLATION IN PRICES OF ECONOMIC GOODS:

Furthermore, the skyrocketing prices of economic goods are also deplorable. 

Using the “actual hope of the common man”- garri as an example, throughout the years, this product has experienced price fluctuations tilting toward the higher side of spectrum. The current price of a bag of garri is at about forty-four thousand naira. The custard bucket colloquially called “painter,” is at about a thousand and seven hundred naira. This is totally different from the price of a bag of garri as at 2019 which was at about ten thousand five hundred naira, while the “painter” went for about 700 naira. The price therefore has quadrupled over the years .

4. SCARCITY OF PURCHASING POWER:

We also have the issue of the prevalent scarcity of purchasing power — money. The monetary alteration order which was ratified by the President, created a domino effect which has led to the scarcity of money.

The two hundred naira, five hundred naira, and the one thousand naira notes were redesigned, and the old notes were to be proscribed and rendered illegal as at a date stipulated by the government. The pronouncement that the older notes would no more be regarded as a legal tender while the newer currency had not properly circulated, led to economic problems.

As answered by the Central Bank’s FAQ’s (Frequently Asked Questions) section, the reason for the redesigning of the naira notes is to check inflationary pressure. Due to the excess money in circulation outside the banking system, the prices of goods have increased to meet up with the excess money in circulation, hence, solidifying the definition of inflation: the rise in prices due to the decline of the purchasing power over time .

The Governor of the Central Bank, Mr Godwin Emefiele, noted that about eighty-five percent of the money in circulation were outside the banking system. To be more specific, he noted that as at the end of September, 2022, two trillion and seventy-three billion naira out of the three trillion and twenty-three billion naira in circulation were outside the vaults of the banks and held by the public. In his interview with journalists, he said the banks had recovered about one trillion naira due to the redesigning of the notes.

In theory, the opposite of inflation is deflation which is when consumer and asset prices decrease over time and the purchasing power increases . Therefore, to curb inflation in the Nigerian economy, the plan is to control the circulation of money in order for the price of goods to stabilize. This sounds logical only while lecturing university students in Economics 110, but not when a whole country is involved.

In 2014, a commemorative redesign of the one hundred naira note was unveiled by President Goodluck Ebele Jonathan. This “new” note was allowed to circulate concurrently with the older version of the hundred naira note, and gradually, the older version was phased out of circulation. This would have been more lenient and merciful on the masses if it was implemented instead of the sudden ban of the old denominations.

HOW DEMONETIZATION CAN BENEFIT THE NIGERIAN ECONOMY

It is important to note that the monetary policy currently being implemented in Nigeria is demonetization. This is a form of economic intervention in which a country’s currency unit is no longer a legal tender. When demonetization occurs, the notes and/or coins in circulation become essentially worthless as they cannot purchase goods and services .

One of the most popular countries that went through such policy was India. On November 8, 2016, demonetisation of the Mahatma Gandhi Series of five hundred and one thousand Indian rupees was carried out. This was to be swapped with the new five hundred and two thousand Indian rupees. According to the Prime Minister, Narendra Damodardas Modi, he claimed that the policy would aid in the reduction of counterfeit money used to fund terrorism and other illicit activities; to increase cashless transactions, and to curtail the shadow economy :- illicit economy co-existing with the official economy of a country, example, the black market .

Inasmuch as the situation of Nigeria seems not promising, it is sagacious to note that the policy which India undertook, had similar crunching effects as it has on Nigerians presently. India withdrew about eighty-six percent of its currency in circulation and this left a lot of its citizens feeling despondent based on the fact that it was an economy dominated by cash transactions. It initially led to a drop in the Gross Domestic Product, but as at the fourth quarter of 2016, India recorded a seven percent increase in its economic growth. The real estate sector took a great hit in the fourth quarter which was counterbalanced by the agricultural sector and the manufacturing sector which had been expected to fall drastically due to the heavy cash-dependency of the sectors .

Thus, if properly managed, the demonetisation policy instituted by the Nigerian government will culminate in the burgeoning of the economy and the buoyancy of its resources; effectively tackling the menace of inflation, thereby making life more tolerable for the common man.

FACTORS OF THE UNDERDEVELOPMENT, RESOURCE AND ECONOMIC SCARCITY IN NIGERIA

It is equally important to highlight some perceptible factors of the underdevelopment, resource and economic scarcity in Nigeria.

1. PERPETUAL INDEBTEDNESS

One of the reasons of the underdevelopment in Nigeria is indebtedness. Nigeria is in perpetual indebtedness to multilateral leaders such as the International Monetary Fund, Afexim, African Development Bank, and other foreign countries such as Japan, France, Germany, and India. In total, Nigeria owes about forty-two trillion naira.

With Nigeria’s population of about two hundred and nineteen million, five hundred and fifty-seven thousand, nine hundred and nine persons , it means that each citizen would contribute about one hundred and ninety-five thousand, one hundred and nineteen naira, and some kobo in order to repay the loan owed by Nigeria. Yet, the standard of living of the said citizens is not far from zero.

2. POLITICAL INSTABILITY

Another perceptible factor is the political instability in Nigeria. The intermittent communal wars and insurgencies by locals or extraneous bodies in the country have scared off possible investments and investors. Aliko Dangote who is the richest man in Nigeria plans to open a family office in New York due to the insecurities in Nigeria which leads to frequent capital flight and naira devaluation.

3. CORRUPT POLITICAL LEADERS

In tandem with the aforementioned points, bad political leaders constitute a major reason for underdevelopment. The government controls the growth of the economy through its policies and decisions. When avaricious, and self-centred charlatans occupy the seat of authority, economic dilapidation is bound to occur. The reverse is the case when competent and intentional leaders are at the helm of power. Inspiration should be drawn from the Arabian state, Dubai. It was a complete wasteland, and a desert. Due to effective leadership and goal-oriented leaders, it became a rivaling force in less than fifty years.

CONCLUSION

This article is a comparison between the economy of the immediate post-colonial era, and the present Nigeria, including some foreign countries, how demonetization can benefit the Nigerian economy, and the factors of underdevelopment, resource and economic scarcity in Nigeria.

In conclusion, the underdevelopment of Nigeria, the economic and resource scarcity seems time-framed. It seems like a phase that may slowly pass if the right steps are taken from this instituted policy of demonetisation. When or if this occurs, Nigeria can slowly emerge as a domineering force, and naira can be proudly mentioned in the foreign market and not tucked away like the wraps of substandard confectioneries.

REFERENCES

-Rodney, Walter; Babu; Harding (1981) How Europe underdeveloped Africa

-Black’s Law Dictionary

-Indeed.com

-Exchange rate archives: Central Bank of Nigeria

-Corporate Financial Institute

-Wikipedia

-Oxford Languages

-American Economic Association

-NaijaPrice

-Investopedia

-Forbes Advisor

-Economics.rabobannk.com

-Worldometer

-Bscholarly.com

-Dubawa.org

AUTHOR

ETINOSA EGHAREVBA

MAROON INK