A foreign rating agency in a recent report joined Nigerians in bemoaning the fate that has befallen the nation’s legal tender, the naira, which had exceeded N1000 to the dollar threshold but seems to be recovering slowly at a little above N800 to the dollar.

The Nigerian currency is perceived, even by local experts as the most devalued anywhere in Africa. In the early 1980s, the currency was strong enough to be accepted as a medium of exchange in some international finance capitals. Suddenly, that achievement was frittered away by administrations that did not see the wisdom in building on the attainment.

It is from that perspective that its present state of affairs as regards its value in the currency market is considered inherently disheartening. This problem with the naira is not a recent development.

But there was a time that the currency was treated with the decency it deserved in its competition with others elsewhere. In those days that are considered the golden era of the nation’s economy, the productive sector of the country was booming, at least by African standards. Investors were flowing in to take advantage of the favourable investment climate in the country then.

All sectors of the economy were operating at a level that made the country a must go business destination. The agricultural sector, especially, was making its impact to the point that most raw materials were sourced locally.

The textile factories survived on the lush cotton farms in parts of the North, the automotive companies that sourced a sizeable portion of their inputs from Nigeria were doing good business, transferring technology and creating jobs. Tyre producing companies promoted the cultivation of rubber in parts of the south south and were empowering local, small holder farmers.

There were many industries producing household products most of which sourced their raw materials from cocoa, palm oil and groundnut all grown in the country. Food drinks were not left out in that drive to really grow the economy and build its Gross domestic Product (GDP).

The success of that effort reflected on the value of the naira, there was a minimal stress on the local currency. Foreign currencies were not as dominant as they are today.

Soon emerged the cankerworm known as policy inconsistency and its twin sister, ill-advised import substitution preferences. These succeeded in subduing the agricultural sector and, by implication, the industries that relied on it.

This was made possible by the years of easy petro-dollar that lulled everyone into a state of complacency, especially policy-makers, who began to feel that money was not the problem but how and on what to spend it.

Before the nation realised sufficiently that the economy was on a downward spiral that kept chipping off the value of the naira, it was already too late as there was not enough dollar and pound to finance the indecently acquired taste for imported goods and services.

What happened to the naira started when production declined and the nation lost its grip on the productive sectors. Factory spaces became churches and Nigerians started clapping and singing in them instead of putting them into productive use. Textile companies folded up and became car dealerships.

A lot of measures were put in place to manage the drift which ended up compounding the problem that is presently trying to strangulate the Naira.

To the consternation of the citizenry already used to bank transactions when the need for foreign currencies arose, black market emerged from nowhere and took over the space. Their rates have become the benchmark for assessing the true value of the naira.

That market has defied every effort by the regulatory agency, the Central Bank of Nigeria (CBN), to control its dominance of the foreign exchange market, to no avail. Instead, round-tripping, a process of obtaining foreign currencies at the official rate and selling them at the black market at higher rates, has continued unabated.

The situation is made worse by the Deposit Money Banks (DMBs) that randomly refer their customers to this market if they need foreign currency above a certain limit. Curiously, this so-called black market, an outlet for underhand transactions elsewhere patronized by shady characters, is accepted as the real deal in Nigeria.

Soon, the political class joined the fray and started hoarding the dollar for political purposes, denying the productive sector the foreign exchange it desperately needs for importation of raw materials and spares.

All these have contributed to the weakening of the naira with the disastrous effect that it is having on the economy generally.

Cost of living has become outrageously high. Businesses are struggling to keep their heads above water. Sadly, the Central of Nigeria (CBN), is being made the fall guy as everyone expects it to satisfy their foreign exchange requirements without stopping to ask the pertinent question, how can the nation generate the foreign exchange enough to go round?

The CBN, like any other elsewhere, is not in the business of mass producing any foreign currency for that matter. The only way to generate this hard currency is to expand and increase the influx of foreign exchange through embarking into productive exercises for export.

Presently, not much of this activity is going on. But there is no quick way out of the quagmire other than for the nation to reorder its priorities. Already, the nation’s foreign reserve is depleted. What this means is that the nation must look inwards if the present situation is to be reversed.

Without productive activity, there is not much anyone can do to save a situation that is becoming increasingly dire. If the nation desperately needs foreign exchange as it presently does, then the citizens must necessarily roll up their sleeves and work hard to produce not just for local consumption but also for export.

The continued importation of petroleum products is a drain on scarce foreign exchange. Non essentials like medical and educational tourism at state expense added a dangerous mix that is utterly unhelpful. At a certain time, the CBN toyed with the idea of bringing the Chinese Yuan as an added currency to ease the pressure on the dollar.

The nation was upbeat just as the CBN warned that even that must have to be earned. In other words, without a strong productive base the country still has a long way to ease itself out of the logjam of low currency value and its impact on the economy.

What this suggests as a solution is a serious and determined approach to the diversification of the economy away from hydrocarbon. This is a policy that must necessarily escape the lip service it is presently receiving. Non-oil sectors such as solid minerals, agriculture and tourism must take the front burner of economic discourse if the naira is to regain its stability in the open market.

As at today, the nation is an import-dependent country. We import everything from apples, biscuits to tooth pick. But the economy must come off its import dependency malaise and focus on economic activities that promote local sourcing of raw materials and produce for export.

That is the way out of what is going on now. That is the way to restore the value and prestige of the naira. What is required is the political will to do the needful.

Iwu is a retired banker based in Lagos.