Naija Foodie Update

FOODIE NAIJA UPDATE (ANALYSING NIGERIA’S FOREX POLICY FROM COST, BENEFITS’ PERSPECTIVES)

As the real exchange value of the naira against other
currencies continues to stoke public discourse on daily basis, the naira
remains precarious against other currencies especially
the dollar, many
stakeholders say
notwithstanding their noblest intentions, the fiscal and monetary
authoritie’s may have to do more to ensure right exchange rate for the nation currency.

Udo Onyeka reports
It is no longer news that the Federal Government has been reluctant to devalue the naira. Perhaps
what may be new is how and when the nation’s currency would regain its
lost value among other currencies of the world.

President Muhammadu Buhari, while briefing senior journalists last week
on the activities of his government in the last one year, said he has been under tremendous pressure to devalue the naira.

Buhari had continued to say that he needed to be educated on why the naira would be devalued. “My argument has been that those who
devalue their currencies have developed economies, where there is local
production and they export the excess.

They have good
infrastructure. So they devalue their currencies to sell their products outside their shores, and employ their people. People just
take the money out of the country. How many factories have we built? So I refused to devalue the Naira.

“Now you need N350 to get a dollar! I challenged Nigerian economists to tell me what benefits Nigeria has earned from the devaluation so far.

How many factories have we built by killing the naira? I
have to reluctantly give up because the so-called Nigerian economists come
and talk things to me, and when I raise issues they talk over my head instead
of inside my head. For us to lose over N300 (every year
we’re losing the value of the currency by N100), what for? Let them tell me
how many factories they’ve built.

I find myself in a very
difficult state because the economists cannot tell me why we should continue to devalue our Naira. People say import, and we find out that we are just importing food! We’re now planning
to stop importation of rice, wheat, maize in three years’ time.

On the value of the naira, I’m still agonising over it, that the naira should be reduced to such a dis-graceful level over the last 30 years. I need to be educated on this. But I’m not ruling this country alone.

I’m under pressure and we’ll see how we can accommodate the
economists”, he said.
Lagos Chamber of
Commerce and Industry said the decision of the
Central Bank of Nigeria, CBN, to adopt a flexible exchange rate regime was
desirable in the light of prevailing economic realities, adding that there is however, a need for
clarity on what the apex describes as a special window for critical transactions for which preferential rates will apply.

“We would like to caution against possible abuse and
distortions that such a window could create. On the immediate, relaxing the impediments that will allow liquidity to flow into the
autonomous forex market is desirable”, LCCI said The sharp decline in global oil
prices which has cut
revenue from sales worth 70% of government income and the resultant
fall in the country’s foreign exchange earnings, had posed a serious threat to the new administration of President Muhammadu Buhari which came into
being on May 29, 2015.

Till few days ago the
government and Central Bank of Nigeria, CBN, has not been able to overcome or mitigate undesirable outcome of policies put in
place to revamp the
economy.
Penultimate week, the National Bureau of Statistics, NBS, announced that the Nigerian economy
shrank by 0.36% in
the first quarter of this year, with unemployment
increasing to 12.1%
and Inflation rising to 13.7% in April.

But in what some experts said was a right move the CBN
on Tuesday agreed to
introduce greater flexibility in the foreign exchange
market. President Buhari has refused to devalue the naira, despite a growing
gulf between the official exchange rate of 197/199 to the dollar and black
market rates of up to N350. The difference has led to a shortage of foreign exchange, negatively affecting businesses and fuel importers unable to
buy supplies, causing
scarcity of the products that hit the nation since December 2015.

The CBN’s Monetary Policy Committee, MPC, which met
Monday and Tuesday, said the nation would adopt “a flexible foreign exchange
rate policy”, but details on abandoning the currency
peg have been made
available, with the ape
bank promising more
information in “coming
days”.

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