On Thursday, a Nigerian news platform, The Cable, played host to a four-man panel policy dialogue on the exchange rate. The panel, made up of Bismarck Rewane, CEO of Financial Derivatives, Issa Aremu, Deputy National President of the Nigeria Labour Congress (NLC), Moses Tule, Director of the CBN Monetary Policy Department and Muda Yusuf, Director-General of the Lagos Chamber of Commerce and Industry, discussed the topic, “The Naira on Trial: To Devalue or Not?”
This debate comes at a time when Nigerians are very unsure of the best decision the government should be taking concerning devaluation. The country is currently dealing with fall in the price of oil, diminishing foreign inflows as well as a threatened foreign reserve.
The speakers talked about their individual stands on devaluation and how the currency restrictions put in place by the Central Bank has affected businesses. These are the main quotes from the speakers in chronological order:
Comrade Adams Oshiomole – Governor of Edo State
Comrade Adams Oshiomole, who delivered the keynote address, affirmed his stand with the president on not devaluing the Naira. He reaffirmed that his stance on the matter is not because he is a loyal party member. Here are a few quotes from his address:
“Those who are pushing for devaluation are investment bankers and those who make money on playing the exchange rate – they don’t want any interference.”
“Devaluation will increase the inflow of dollar but it will lead to the demand for more remuneration by workers.”
“I stand with the Commander-in-Chief, President Buhari, on no devaluation, not because I’m a loyal party member, but because no statistics support the advantages.”
“A drug you administered on your child in 1986 and it didn’t work, administering the same in 2016 would be foolish.”
“When economists tell you this is the solution, they are battling with their values and biases.”
“If devaluation was an answer, from one to one we didn’t find the answer, from one to nine we didn’t answer and now one to 198 we still can’t find the answer…then the position of President Buhari and the CBN is viable.”
Moses Tule, Director, CBN monetary policy department
“Nigeria is undoubtedly a big economy, but we are faced with a big shock today because we did not put our house in order.”
“Devaluation may come someday but it may then come on the strength of a strong industrial policy.”
“The UK has a drop in the export of clothes after CBN forex policy.”
“If you don’t earn foreign exchange by doing legitimate business, the Naira will depreciate.”
“In 1986, we depreciated the Naira by 75.9 percent, in 1989 by 23.9 percent…2001 by 3.1 percent…February 2015 by 14.25 percent…all these were premised on the issues raised by the Excellency, in the hope that we could accommodate the pressures and then build on the devaluation. But we have never built on the devaluation.”
“Devaluation is sound economics, if the fundamentals are right.”
Isa Aremu, Deputy National President of NLC, doesn’t seem favourably disposed to devaluation either.
“We are all talking of a major shock, but what shock can be stronger than oil dropping to $10 dollar per barrel under General Sani Abacha? Still, the naira did not exchange for more than 22 to a dollar.”
“After the NNPC group, Dangote Group is probably the highest FX handler in Nigeria.”
Lagos Chamber of Commerce and Industry
“The CBN has the right to regulate. We love risk, but we hate uncertainty.”
“With CBN’s uncertainties, you can’t land, you can’t take off.”
“We can’t even source dollars for the items outside the CBN list of 41 items.”
“About 80,000 jobs are at risk in the manufacturing sector.”
“43 items banned by CBN lead to constraint of over 700 business lines”
Bismarck Rewane – CEO of Financial Derivatives
He talked about people abusing the system, obtaining forex from the central bank and selling across the roads without rendering any service.
“The devaluation is not as impolitical as people are making it seem.”
“The CBN cannot manufacture dollars but can only manage the distribution.”
“The debate should shift to what are the effects of the absence of a forex policy.”
“The abusive use of foreign exchange is alarming in Nigeria”
During the event Frank Aigbogun, founder & CEO, of , the moderator of the event asked the panelists to tell him which exchange rate govern decision-making whether it is parallel or inter-bank?
Their responses to the question:
Aremu said parallel.
Tule said inter-bank but the audience disagreed with a roar.
Rewane’s answer: “Everybody in this audience knows that you cannot get the dollar at 199; you get it at the parallel market, so let’s not deceive ourselves.”
“In my village, the price of garri, plantain has nothing to do with your exchange rate.”
“Let’s not look at the value of the naira with respect to other currencies, but how much it can buy at home in the local market for the average Nigerian.”
From the quotes above we can clearly deduce the stands of the stakeholders in this economy, how well they understand devaluation as well as knowing some of the issues Nigerians are faced with.