Journalism of Courage

Naira Free Fall: Economic Analysts, Other Nigerians Knock CBN Governor’s Fiscal, Monetary Policies

…call for his scalp as millions of Nigerians have been pushed into abject poverty

The unprecedented free fall of Nigeria’s currency, the Naira, plummeting to all-time low of over N800 to a U.S dollar, the lowest in the annals of Nigeria’s economy, is nothing but witless, scandalous and deleterious to say the least.

From 2015 to date, the Central Bank of Nigeria (CBN) had watched helplessly, applying some policies towards taming the bullish run of the dollar against the Naira. The currency has continued to slide under the watch of Mr Godwin Emefiele at the helm of the country’s apex bank following the scarcity of the dollar in Nigeria, thereby pushing millions of Nigerians into abject poverty.

Instead of checkmating the current tailspin, the CBN has been engaging in blame game, name-calling and buck-passing. Spiral inflation of about 19 per cent from about 8 per cent in 2015 when the Buhari administration took over the reins from President Goodluck Jonathan is hitting Nigerians very hard with goods especially food items priced beyond the purchasing power of the people.

The apex bank’s interventions in agriculture and other sectors have not translated into a life belt in the economy because of lack of clear-cut economic agenda and technocrats at the inception of the administration. The lacuna coupled with more than eight months lull in Nigeria’s political economy as President Muhammadu Buhari could not constitute his cabinet, had left key economic and political decisions in a state of flux.

Unstructured and unrestrained borrowing especially foreign loans with attendant dwindling revenue to service the debts of about N35 trillion, lack of political will to take some decisions, insecurity, large scale corruption, petrol subsidy, bogey of unemployment and others have all conspired to prostrate the economy.

The issue of the exchange rate has assumed a national and international embarrassing magnitude with the Naira being exchanged at the rate of N429 to a dollar at the official market while at the parallel market it is about N706 to a U.S. dollar. Coupled with this is the high interest rate on lending by banks that has also sent the economy into tailspin and doldrums.

In advanced democracies, economy leads politics but in Nigeria and some African countries, politics leads economy, getting more attention than the economy, according to Bretton Woods conference formally known as the United Nations Monetary and Financial Conference held in US some decades ago.

The conference posited that we need a good politics to have a good economy; economy and politics should not be independent, economy is the senior and should drive politics. If the economy is down, politics cannot flourish and that is the stark reality.

A case in point is the late Chief Obafemi Awolowo’s economic policies in the defunct Western region of Nigeria with the harnessing of resources from agriculture, cocoa, rubber, kolanuts and the setting up industrial estates in Lagos to create wealth for the self-sufficient region. It is doubtful if political leaders of today are keying into the philosophy of political economy.

To all intent and purposes, the persistent free fall of the Naira is an indication that none of the interventions being applied by the monetary authorities has worked. The real problem is ignored while wrong interventions are being prescribed for the ailing economy that may lead to its death.

The recent shutting out of Bureau de Change operators from accessing foreign exchange from the CBN, the existence of several exchange rates that are applicable to different people and situations particularly those in government in addition to the parallel and official exchange rates are also contributory factors the sliding currency.

The Manufacturers Association of Nigeria (MAN) had lamented that some 272 industries had shut down because of the import restriction placed on 41 items by the CBN. The items were delisted from the official foreign exchange window, leaving the companies that make use of the items to source foreign exchange from the parallel market.

The association also lamented that about 180,000 jobs have been lost in the sector to the forex scarcity that had forced many small-scale businesses to close shop.

A reactionary regulatory authority had indulged in putting the blame at the doorsteps of NNPC, AbokiFX, Bureau de Change and everybody for its non-performance.

Emefiele, who has been describes as a bad workman, blamed the national oil company for what he called non-remittances of dollars to the foreign reserve. In its response, the National Youth Council of Nigeria (NYCN) through its President, Comrade Solomon Adodo, called for his sack without further delay.

He said:“From all indications since his failed presidential bid as well as his rejection by the All Progressives Congress, a partisan Emefiele has been doing all to rubbish the achievements of President Muhammadu Buhari and this should no longer be permitted.

“And in a manner that fits his erratic policy, he has at present shifted all blames to the NNPC. This is clearly a case of a bad workman who blames every other person for his inability to deliver. To us at the NYCN, Emefiele is tired and should be sacked by President Buhari.

“As Nigerians concerned about the future of this country and before Mr. President heeds our clarion call to send Mr. Emefiele packing from the CBN, we advise that the CBN considers among other options the World Bank’s recommendation of adopting a single market-responsive sustainable exchange rate, improving access to forex through well-defined periodic forex auctions, and signaling a renewed commitment to price stability as a primary goal of the apex bank.

“We are all witness to the fact that from August 2020 to July 2022, the official exchange rate has moved from N381 to N415/$, representing only a nine percent increase. However, the parallel market has moved from N470 to N710 within the same period representing a 51 percent increase and a record 71 percent arbitrage with the official exchange rate creating a huge incentive for round-tripping, price gouging, sharp market practices, and inflation.

“The NYCN is therefore shocked by the comment of the Governor associating the free-fall of the parallel market rates to NNPC, even though it is purely a monetary policy issue and outside the purview of the NNPC.’’

A financial analyst, Dr Ibidunni Abibakun, said the flip-flop policies of the CBN governor had resulted in the rupture of the country’s financial system.

He said Emefiele to have abandoned his job at some point to run for APC presidential ticket was a clear indication that he was mendacious and insincere in the discharge of his duties.

“An assignment as serious as head of a country’s Central Bank requires a serious-minded person to monitor and follow through his policies and that of the government if any to take the economy out of the woods.

“Instead of being given the boot, we were surprised that after the botched attempt to run for president, President Buhari renewed his appointment for another term of five years.

“This is unacceptable; yes it is legitimate for him to aspire but he ought to have resigned his job and not come back to office. He has lost focus, he has lost concentration and the confidence of players in the sector,’’ he told Persecondnews.

Persecondnews recalls that Emefiele had on June 5, 2014 at a maiden media briefing in Abuja, stated unambiguously: “My mission is to build a Central Bank that is PROFESSIONAL, a Central Bank that is APOLITICAL and people-oriented.’’

It is lamentation galore for a financial journalist and senior editor covering the money and capital market for upwards of 25 years in Lagos, Mr Olisa Egbunike, who expressed sadness that from N156 or N158 to a dollar in 2015, the Naira has now crashed to more than N700 to a dollar.

Summarily, he declared:“ Emefiele has failed roundly. He should have gone five years ago. His campaign for Presidency was diversionary to cover up his failures.

“Throwing in the towel now in the midst of the crisis is too late. We have never had it so bad. The economy is in comatose.’’

Recalling that at the coming on board of the Buhari administration there was no economic agenda, Egbunike said Nigerians should not expect anything less from the government. After taking out Jonathan, they started scampering for an agenda and up till now, there is no economic agenda. What we have is a political agenda.

“CBN, noticing that they don’t have an agenda, managed to come up with monetary and fiscal policies which resulted in broken chains. Even before the end of his first tenure, the governor abandoned his job and plunged into politics.

“Under the watch of the governor, the productive (manufacturing) has suffered so much because of the absence of a fiscal policy. No attention is being paid to small and medium scale industries.

“Manufacturers have closed shops. They laid down their problems but government is not listening. Mechanized agriculture that government should leverage on is at zero level now because of insecurity across the country.

“Farmers cannot go their farms any longer for fear of being killed or slaughtered wantonly,’’ the analyst said in an interview with Persecondnews.

On what could be done to shore up the value of the Naira, Egbunike, a media consultant and editor of a financial magazine, said the Naira will continue to fall until earnings from export improves particularly for the crude oil export and refined products from the local refineries for marketing to neighbouring countries as Nigeria is currently doing on gas supply.

“He asserted:“ We should de-emphasize the issue of consumption – the dependence on imported items; luxury goods should be heavily taxed. For instance, vehicles manufactured in 2021 in Europe and other parts of the world are already in Nigeria, they should be taxed.

“Again, the Naira can only find its level not by floating it but only if the federal government goes into serious manufacturing and production.

“Serious efforts should be made to curtail insecurity across the country as any policy to refloat the Naira will not work. Also with massive fraud and corruption, it will not work. Again, there is no political will on the part of government.’’

On its part, the Association of Bureau De Change Operators of Nigeria (ABCON) called for the scrapping of the official fixed rate in the foreign exchange market.

According to its President, Mr Aminu Gwadabe, abolishing the fixed rate will strengthen the naira given the recent depreciation of the currency in both the official and the black market.

He also suggested an intervention in the open forex market through the supply of dollars to address the scarcity of the foreign currency in Nigeria.

“It might sound counter-intuitive, but the way out of the current frenzy is to abolish the official fixed exchange rate and allow the Naira to float. CBN should contemporaneously undertake a large-scale dollar intervention in the open market that can inspire confidence in the Naira and checkmate the current tailspin.

“Once there is a significant positive movement, the market will react and, in all probability, spur an avalanche of panic selling and further buoy the Naira.’’

Read Also: Buhari gets Nigerians’ bashing for approving N1.14bn for purchase of vehicles for Niger…

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