Consumer Confidence As Consequent Result Of Naira Devaluation By Nasiru Suwaid
It is a perpetual perennial battle of supremacy in governance, between operational characteristics of politics and the idealistic rules of economics, and nowhere has this became so self evident, than in the recent Brexit campaigns and the eventual result it produced, which was a referendum on the United Kingdom (UK) membership or otherwise of the European Union (EU), as such, while the ‘remain’ campaign extolled the financial virtues and benefit of continuing to belong to a larger economic trading block.
The promoters of the ‘exit’ campaign, premised their political advocacy on regaining the lost glory of the former British Empire, as an independent Britain that is able to do its trade deals individually, promote its narrow interest in the global arena and trumpet its relevance in international politics, unencumbered by the European block influence and its likely resulting constraint.
As the story goes and concluded, it was the ‘exit’ group which won, but, that is not what is important in this discussion, rather, it is the reaction of the two sides that mattered, which was to accept the result and resolve to implement it, even though, the ‘remain’ group was strenuously opposed to it.
What is worth noting here is that, wherever political considerations gained ascendancy over economic realities, as it is usual with the art and act of governance, the political leaders must resolve to implement it and start to formulate its positive effect for the country, even though, it is the outcome of unforeseen circumstances.
One of such an eventuality or negative happening which occurred, was the expected depreciation of the British pounds, that lost nearly 30% percent of its value after the Brexit and the emerging narrative now in the economic sphere of discourse in the British isles is to proclaim and highlight the advantage of a weaker sterling, to the output demand of the of the manufactured products, most especially, in the context of the exported goods being much cheaper to foreign buyers and gaining market share on the shopping staple of the consumers.
Now, the recent adoption of the flexible exchange rate by the Central Bank of Nigeria (CBN), which allowed the naira to be freely floated in the market, thus, causing a fluctuation in the value of the national currency, with a resultant effect of an unintended devaluation, could as well be approached in the British fashion.
Since, the main source of revenue for the Nigerian federation is the volume of international trade in primary commodities, most especially, crude oil, thus, what is collected which are in foreign currencies, must be converted into local currency of a naira note, the amount of revenue receipts allocated to the various tiers of government must be higher, to the level of the depreciation of the local currency.
To put in a much clearer term, the resultant effect of devaluation is more money into the hands of the citizens, but, lesser value in what it could purchase and higher inflationary trend, as it is observed daily, however, if that increase in revenue could be positively utilized, through stimulation of consumer confidence, by sustaining and even increasing personnel emoluments.
Finding creative ways through social intervention programs, which put money into the hands of the citizenry and settlement of contractor debts and even generation of newer projects, it could help to stimulate consumer activity, which in turn galvanizes production, trade and developing economic growth.
And this two other things:
WHAT OBAMA DID NOT DO
Last week, as part of a valedictory media engagement with the national press, the outgoing United States of America (USA) Ambassador to Nigeria, Mr. James F. Entwistle spent most of the week exploring and explaining his thoughts, visions, hopes, fears and challenges of the country, he is about to finish a tour of duty.
Mind you, what is most unique and thus, worth considering about the statements, was the fact that he is due for retirement from the American foreign services. As such, he is much probably to be less diplomatic and more likely to be freer in expounding his thinking process.
Also, while most of the conversations were about the perennial Nigerian problems on national question, which are insecurity, infrastructural deficiency, national unity and socio-economic challenges of an emerging nation state, however, I was much more interested in his verdict on the Nigerian economy and its handling by the President Muhammadu Buhari (PMB) administration, not in the fact that he commended it.
But, when he did a comparative analysis with the beginning of the first term period of the President Barack Obama presidency, on how the new American president, as he then was, met an almost similar economic and financial situation of an impending recession, when he took over the leadership of the country.
Of course, unlike the Nigerian leader, who took time before appointing his cabinet, the American president was much faster into his tenure, in appointing his key administration officials. Unfortunately, that is only where the difference existed, as President Barack Obama took his time to engineer an economic recovery, upon slow, painful, methodological and deliberate process, which took a lot of time and tasked the patience of many an American voter.
For an administration which came into power in the beginning of 2009, it was only by 2011, signs of economic recovery began to be noticed and manifested, a clear three years into its tenure. As a further proof, President Barack Obama came into office in 2009 with full control of the United States Congress (USC), with the Democratic Party having 57 members in the Senate and 256 representatives in the House, while the Republican Party was having 41 members in the upper chamber and 178 members in the lower chamber.
By the next election circle in 2011, his Democratic Party in the Senate came out of it with 51 members, although a majority, albeit, a significant reduction, but, it is in the lower house, the Republican Party overturned the majority, with 242 membership to Democratic Party 193 members, obviously, a verdict on a depressed economic that is yet to gain traction.
SLOW DECIDERS MAKES BETTER STRATEGIES
First, in order not to leave myself open to charges of plagiarism, let me acknowledge the fact, that the title as well as most of the ideas in this writing is culled from an article of the same heading, a research presentation in the Harvard Business Review (HBR) by Mark Chussil, which is a journal of the Harvard Business School (HBS). It is an analysis exploring the concept of competitive strategy problem, examining why there are those who make good competitive strategy decisions and, the possible reasons, why there are others who cannot do it.
General intelligence and business degrees seems a good sign, but smart people with business degrees don’t agree on what works on strategy, as they are the specimen-subject of this research work, their aim was the interpretation of the mindset of a decision maker. What they found out about mindset in forming a decision or formulating a policy was that people put much credence on confidence.
However, there is a difference between someone who is confident, after laboring over a thoughtful decision and someone who is confident over a snap decision or to put in another format, there is difference between someone, who is unsure after a serious contemplation and someone who is unsure about a quick pick.
As for the former scenario, the likelihood to make costly mistake as in implausible risk is less probable, while in the case of the latter, the probability to commit grievous mistake in decision making is much more likely to happen. The two main objectives obtained from the exploratory analysis was that; the essential lesson for competitive strategy, the decision makers are not to be so fast, in arriving at a position, rather, they should take their time and don’t be so sure, as not to entertain even the tiniest likelihood of a mistake, even when some strategies just don’t apply, even in the most ideal environment.
Also, the second project objective result was that; the willingness to apply that mindset in competitive strategy is what separates good decision makers from the bad ones. Thus, it is could be easily seen in the context that, when such private sector behavior is applied into public sector governance, as in competitive strategy being substituted in public policy management, good positive governance would be the probable result.
Follow me on twitter: @neeswaid