By Demola Akinyemi
Former Chairman, Senate Committee on Banking Insurance and other Financial Institutions, Dr Rafiu Adebayo Ibrahim, yesterday warned that the politicisation of the exchange rate has become an unhealthy obsession in the country.
He explained that such a move only empowers the political class to do more harm to the nation’s economy.
Ibrahim said this in a paper he delivered at the 30th edition of Media Parliament of the Kwara State Council of Nigeria Union of Journalists (NUJ), held at the Press Centre, Offa Road, GRA, Ilorin.
In his paper titled, “Naira Devaluation by Central Bank of Nigeria: How Did We Get Here? What Are The Challenges and Prospective For Us As Nation?”, the former legislator recalled that attempts made in the past at liberalization were in the right direction but required financial discipline to provide savings for the future challenge.
Ibrahim, a financial expert and consultant, who represented Kwara South Senatorial District in the eight Senate, said that Nigeria, being a monolithic economy was enough reason for it to be futuristic in its savings and investment policies.
He urged the government and regulatory agency on monetary policy to relegate politics to the background and allow economics to rule and reign on the issue of the naira exchange rate and make the market determine its fair value both at the time of boom and otherwise.
The former senator advocated the promotion of local production and industrialization, particularly of products that are highly in demand.
He added that the time was ripe to diversify the economy under a truly long-term strategic plan that would turn around the fortunes of the nation away from being mono-product.
Ibrahim also called on the government to address the incessant insecurity that had eaten deep into the economic life of the nation, warning that the devastating effects of the situation, if unattended, would make the value of the nation’s currency worse.
“It is important to state that the politicisation of the exchange rate of the naira is an unhealthy obsession in Nigeria. It only gives politicians an incentive to wage war against reality by doing things that are economically harmful.
“Attempts made in the past to embrace liberalization is a step in the right direction but should have been also backed with some high level of financial discipline that would provide savings for a rainy day. The very act of trying to fiddle with the currency whenever we run into trouble is what really needs to be re-examined.
“Knowing that we are a monolithic economy is enough reason for us to be futuristic in our savings and investment policies. The moment oil prices crash, businesses and transactions that were perfectly legal suddenly become ‘unpatriotic’ and everybody becomes an expert in economics with the pressure of the policymakers who are in most cases obviously ill-prepared, policy-wise for such situations.
“It is only in Nigeria that you see a situation where we pray and hope for high oil prices to sustain our spending pattern without saving, while we want to keep the exchange rate ‘stable’ even when revenues have collapsed dramatically.
“We all know that it is not possible to have all these things at the same time, as you cannot eat your cake and have it at the same time”, Ibrahim said.
In his remarks, the Chairman, Kwara State Council of NUJ, Abdullateef ‘Lanre Ahmed, said the volatility of the exchange rate was baffling, hence the urgent need to address it, especially its adverse effects on the local economy.
Ahmed traced the problem to the summersault on the nation’s monetary policy, which has consistently weakened naira in the global economy and in turn affected the purchasing power of the masses.
“At the moment, the exchange rate of naira for one dollar in the black market is over N550, and getting forex at the designated commercial banks is a herculean task. This is just as the CBN continues to act in a manner that suggests that our naira would further experience devaluation.
“And out of curiosity, you begin to wonder whether the monetary policy of the apex bank is congruous with the reality beyond policy documents that are often bandied around to divert attention.
“Similarly, the penchant of the federal government for external borrowing is now at an alarming proportion, thus accentuating claims and counter-claims on the desirability or otherwise of the government’s step”, Ahmed said.
Vanguard News Nigeria