Kemi Adeosun, tipped by some analysts to be the next Nigerian finance minister, said a currency devaluation on its own won’t solve the nation’s economic problems and she supports the central bank’s foreign-exchange restrictions.
“What the Central Bank of Nigeria governor has done is brought in some breathing space because if we allowed the market to continue, all our reserves would have been depleted,” Adeosun, 48, told lawmakers during her Senate confirmation hearing on Wednesday.
President Muhammadu Buhari nominated Adeosun, a former investment banker and London-trained accountant, as a cabinet minister, without disclosing what portfolio she may lead. Analysts including Bismarck Rewane of the Financial Derivatives Co. in Lagos, and Manji Cheto, vice president of risk adviser Teneo Intelligence in London, said she may be finance minister, given her position as finance commissioner of Ogun state in the south-west of Nigeria for the past four years.
Central Bank Governor Godwin Emefiele has resisted pressure from investors and fellow policy makers to devalue the naira despite a plunge in oil revenue, introducing foreign-exchange controls instead to stabilize the currency. The naira has averaged 198.99 per dollar since the restrictions were imposed in February.
“There are pros and cons around devaluation,” Adeosun said. “Adjusting the foreign exchange rate on its own in isolation will not solve our problems.”
Buhari’s finance minister will need to restore confidence in Africa’s biggest economy in the face of lower oil prices, slowing economic growth and attacks by Boko Haram militants.
The economy of Africa’s biggest oil producer grew at its slowest pace this decade at 2.4 percent in the second quarter from a year ago, as falling income from crude exports and foreign-exchange shortages hit businesses.
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Adeosun, whose nomination was approved by the Senate on Wednesday, has degrees in economics and public financial management from universities in London, according to her LinkedIn profile. She worked for PricewaterhouseCoopers LLP in London and at Chapel Hill Denham Ltd., a Nigerian investment bank, before becoming finance commissioner of Ogun state in 2011. It has the seventh smallest economy of Nigeria’s 36 states, according to Renaissance Capital.
Adeosun added that she’s in favor of lower interest rates and reducing the government’s spending on salaries and overheads from 78 percent of the budget. The government must increase revenue, spend it better and seek other sources of funding, she said.
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“What we need to do is strategize and the solution will not just be exchange rate,” she said. “The exchange rate is not the silver bullet, it’s not the wonder drug. It has to be accompanied with fiscal policies and monetary policies and industrial policies.”