Why Nigeria’s Vice-President, Yemi Osinbajo, calls for devaluation of Naira

Nigeria’s Vice-President, Yemi Osinbajo, has called on the country’s apex bank, Central Bank of Nigeria (CBN), to devalue the naira to reflect the reality of the market.

Speaking at the midterm retreat of President Muhammadu Buhari’s second tenure, the vice-president said the exchange rate is artificially low, and this is deterring investors from bringing foreign exchange into the country.

“As for the exchange rate, I think we need to move our rates to [be] as reflective of the market as possible. This, in my own respective view, is the only way to improve supply,” Osinbajo said.

“We can’t get new dollars into the system, where the exchange rate is artificially low. And everyone knows by how much our reserves can grow. I’m convinced that the demand management strategy currently being adopted by the CBN needs a rethink, and that is just my view.

“Anyway, all those are issues that when the CBN governor has time to address, he will be able to address in full.”

The naira is changing for a dollar at 411 at the official side of the market, while the same goes for 565 to the US currency at the parallel market.

CBN COMPETING WITH MINISTRIES?
Osinbajo suggested that the central bank is competing with the fiscal side of the economy, which includes the ministries, departments, and agencies of government.

“There must be synergy between the fiscal and the monetary authority. We must be able to deal with the synergy, we must handle the synergy between the monetary authority, the CBN, and the fiscal side.

“Sometimes, it appears that there is competition, especially on the fiscal side. If you look at some of the interventions, you will find that those interventions are interventions that should be managed by ministries.

“The ministry of industry, trade and investment should handle MSMEs interventions, and we should know what the CBN is doing. In other words, if the CBN is intervening in the MSME sector, it should be with the full cooperation and consent of the ministry of industry.

“Sometimes you will get people who are benefiting more than once because we simply have no line of sight on what is going on, on one side.”

Speaking on surviving the economic challenge of 2020, Osinbajo said Buhari deserves the credit for providing steady leadership through the crisis.

“Let me say on the whole that we have been able to weather the storm of a very very serious economic challenge.”

“I think that is largely on the steady and stable leadership we received from the president. I think if Mr. President had panicked in that period, we would have had a lot of difficulties, perhaps we would be in a much worse situation.

“He deserves the commendation for providing that steady hand when that was required.”

Osinbajo said we are at a point in our economic history where anything is possible if the country is willing to work together towards the same objective.

 

(The Cable)

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