Sack Godwin Emefiele, stop black market operators, Naira will rise again!

Afolabi Oladele (08055404653)

When we talk about accurate prediction on the economy, Actuaries in Nigeria uses mathematics to calculate accurately. About a year ago on this medium, I predicted that Nigeria’s economy will be worst in the first 365 days of President Muhammadu Buhari especially the weakening position of Naira against dollar. I also predicted a higher inflation this year (10.16% in 2016 vs 9.55% in 2015). At the end of Buhari’s first term, the inflation rate is expected to be comparable to the years of the Jonathan administration (8.54% in 2019 vs 8.5% in 2013). I am again predicting boom in 2017 to at least +31.11%, which means Nigeria will be selling much more than buying. Already it has happened to cement sector. Again on this same medium, I advised President Muhammadu Buhari on what to do as a matter of urgency. Today again, looking at the current economy situation in Nigeria, below are what President Muhammdu Buhari should do to arrest continuous deprecating of naira against dollars. We must tell ourselves the gospel truth of the matter that (a) Politicians that stashed away our currency abroad contributed to this. (b) President Muhammadu Buhari’s intervention in dollar market made it more difficult. (c) Nigeria do not have experienced CBN governor who can take action as Muhammadu Buhari with his military background insisted that his government will never devalue her country’s currencies. (d) Godwin Emefiele, CBN Governor inability to use flexibility or volatility to its advantage. I see no reason why Federal Government of Nigeria will fixed naira at N199 to a dollar when nobody can get it. I will advise President Buhari to immediately relieve Emefiele of his appointment. (e) As a result of the accumulated pressure on the Dollar against Nigerian currency made Naira depreciating everyday. CBN do not have the skills to control the pressure. (f) Emefiele, the CBN governor should have reduced the demanding pressure on dollar by making it available whenever the manufacturers needed it. To remind my readers about the past, on January 29, 2016, Nigeria president, Muhammdu Buhari at the 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. Muhammadu Buhari was quoted to have insisted that he will not devalue Nigerian currency despite the naira devaluating in the market. According to President Muhammadu Buhari, “Devaluing Naira will make live more difficult to poor Nigerian” As a result of the above, importers of raw materials and equipment migrating to the parallel market to satisfy their demand, the parallel market has effectively become the ruling market for pricing of imported goods and services within the country, with the exception of refined petroleum products, which seem to enjoy some preference in the allocation of FX by the CBN. “Unfortunately, the shallowness of supply in the alternative markets and huge demand is driving importers to a state hysteria, as they seem to be ready to pay any price to meet their demand. “We suspect that ordinary folks and foreign residents have joined this flight to safety and may be converting their Naira assets into dollar to mitigate additional loss in value. “The danger of an unmitigated progressive depreciation of Naira is that our national currency may lose one of the most critical attributes of money, which is “as a store of value” and should this happen, the concerns about the dollarization of the economy will become real. He noted that the disqualification of 41 items from accessing the foreign exchange market is more of nationalist than economic. By this, “We however believe that trade policies are better tools to use in discouraging the importation of goods whose import hurt local manufacturers. We have proven cases of successful use of appropriate trade policies to develop specific industries in the country. “A classical example is the Cement industry where local manufacture has grown from 2,000 metric tonnes per annum to more than 40,000 metric tonnes per annum in 15 years. Nigeria has moved from a net importer of cement to a net exporter as a result of targeted use of trade policy in the subsector,” he stated. A flexible exchange rate management rather than currency devaluation would address the problems of the economy. “We need a cocktail of policies which will include exchange rate adjustment, creating windows of investment for long-term funds through concessioning of commercially viable infrastructure, full deregulation of the downstream petroleum industry and stimulating investment in sectors where Nigeria has comparative advantage, as well as investing heavily in social infrastructure such as health, education, security, etc. “It is such holistic approach to economic management that will change the structure on Nigerian economy and wean it from dependence on Oil for export earnings. “The concerns of the government have been that these routes will inflict pains on the citizens; unfortunately, there is not easy route out. We however believe that it is better for the citizens to take this pain once and have the economy restructured so that we will not be exposed to another crude oil crisis as we suffered in the 1980s, 1990s, 2008 and 2015/16, the Cowry Asset boss added.