Now that President Bola Ahmed Tinubu hastaken proactive steps in addressing flagrant abuse of the Nigerian currency the Naira and by extension the Nigerian economy through proper directives to the Central Bank of Nigeria, namely; the total ban of the use of the Dollar in our local economy as a means of transaction and legal tender, is a notch up to the proper realisation of the value of the local currency.
The following steps should be consideredurgently as a means of putting in place a sustainable implementation of the policy;
Currency Reform: Implement a currency reform that involves demonetization or gradually phasing out higher denomination notes, such as the 1000 and 500 Naira notes, which are more susceptible to counterfeiting, and illicit financial activities.
Cashless policies: Encourage the adoption of cashless policies and promote the use of electronic payment systems, such as mobile money, online banking, and electronic fund transfers. This can help reduce the demand for physical cash and limit the circulation of higher denomination banknotes.
Financial Inclusion: Enhance financial inclusion initiatives to bring more people into the formal banking system; a lot have been done on this, but much more is needed. This can reduce the reliance on physical cash and make it easier for the government to manage currency supply.
Strengthening Anti-Corruption Efforts: Implement and enforce robust anti-corruption measures to reduce illicit financial flows, money laundering, and other illegal activities that contribute to the devaluation of the Naira.
Fiscal and Monetary Policy Coordination:Ensure coordination between fiscal and monetary policies to control inflation and maintain exchange rate stability. This may involve measures such as prudent fiscal management, rationalizing government spending, and implementing effective monetary policies.
Economic Diversification: Promote economic diversification to reduce the country’s reliance on oil exports and enhance foreign exchange earnings from other sectors such as agriculture, manufacturing, mining, and services.
Foreign Exchange Market Interventions: Implement targeted interventions in the foreign exchange market to manage currency volatility and stabilize the Naira. This may involve measures such as forex market interventions and adjustments of the available windows for bidding (floating) by the central bank to regulate exchange rates and above all to ensure liquidity at all times.
Public Awareness and Education: Conduct public awareness and education campaigns to inform citizens about the rationale of such currency reforms and all other government fiscal and monetary policies and the benefit for adopting such reforms as alternative means of payment and the importance of buying and using alternative local products in preference to imported items.
Long term planning: Develop a comprehensive long-term strategy that addresses the structural issues affecting the value of the Naira and promotes sustainable economic growth, issues like enabling environment for local productions, tax reform initiatives, eliminating unfair trade and manufacturing monopoly, level playing field for all concerns and concessions for small and medium scale businesses and above all encouraging entrepreneurial development.
It is important to note that these measures should be implemented in a coordinated and holistic manner to address the underlying economic and structural challenges facing the Nigerian economy.
Additionally, careful consideration should be given to potential social and economic impacts on the population to ensure a smooth transition and acceptance of the proposed reforms.