President Muhammadu Buhari’s unwavering stand against naira devaluation appears to be gathering greater support as more and more top citizens endorse the president’s decision.
Emeka Anyaoku, former secretary-general of the Commonwealth, who spoke in Akure, Ondo State, during the state’s 40th Anniversary Symposium recently, expressed total support for the president on his stand not to devalue the naira.
Anyaoku, who was the chairman of the session, argued that devaluing the naira would worsen the economic situation and cause a severe drain on the nation’s foreign reserves.
He explained that with the country’s dependence on imported goods, which results in a monthly import bill that is four times the value of Nigeria’s main export, official devaluation of the naira would inevitably further hike the inflation numbers.
The major challenge, Anyaoku said, was to devise policies for reducing the country’s import-dependence while, in the meantime, allowing the dollar to float in the unofficial currency market with adequate safeguards being put in place by government to check round-tripping in the management of the foreign exchange.
“As a matter of urgency, the president should convene a meeting of carefully chosen economic experts in the country to discuss the issue, as well as the wider issue of how to deal with the country’s current economic crisis,” he said.
“In my view, those calling for official devaluation of the naira need to come up with a good answer to Nigeria’s basic present problematic situation with its currency,” he added.
Femi Pedro, former deputy governor of Lagos State, while agreeing with President Buhari that the naira does not need to be devalued for the time being, said, “No amount of devaluation will bring up the price of oil. Devaluation will not eliminate parallel market players, nor will it necessarily increase the supply of dollars into the market.”
He added that in actual fact, devaluation would simply push the official rate (and by extension, the parallel rate) up, thereby compounding the currency crisis and further driving more players to the parallel market.
“Inflation will rise, impacting the cost of essential products and services within our economy,” he said.
“A further devaluation will devastate our economy because it will technically make our imports more expensive and our exports cheaper. This is somewhat unhelpful to us because we import practically everything and export very little except oil, whose price is determined internationally and whose supply is quota-based.
“Therefore, the gains of devaluation would be inapplicable to our situation, while the adverse effects – higher import prices, higher rate of inflation, more pressure on the demand for dollar, higher unemployment and general recession – would be catastrophic to us,” he added.
The way forward for the naira, he said, was for the Federal Government to fast-track its efforts towards implementing a sustainable fiscal policy regime tailored towards boosting the local industry, adding that curbing corruption, promoting import substitution and the exportation of indigenous products would go a long way in achieving this aim.
He also said a critical solution lay in “our ability to bring sanity to our foreign exchange system and have better controls over the demand and supply mechanism”, calling for the destruction of the parallel market “as a matter of national emergency”.
Recall that amid numerous calls from both local and international players for the devaluation of the naira following a precipitous fall in crude prices, President Buhari has maintained that he would not devalue the local currency. He reiterated this while contributing to a Presidential Panel Roundtable on Investment and Growth Opportunities at the opening session of the Africa 2016: Business for Africa, Egypt and the World at Sharm El-Sheikh, Egypt, recently.
According to the president, the way out of the current slump in the global oil market is not naira devaluation but a focus on agriculture and solid minerals development.
NATHANIEL AKHIGBE
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