The Nigerian President was on National TV on Tuesday taking questions from journalists in his first ever presidential media chat. He was asked questions on issues ranging from his war on corruption to Boko Haram Crisis, Chibok Girls, the Biafra agitations, fuel subsidy, etc. He also touched on the devaluation of the naira dampening the expectations of those who think the currency should be devalued early next year. Here is what he had to say;
“Personally, I don’t support the devaluation of the Naira. We handed over a secured country in 1979, but by 1984, nobody knew how much Nigeria was owing. The situation now is aggravated by the downturn in the petroleum industry. It is now per barrel and we have debt service of about N1.5 trillion and we have commitment on the ground……I will not support devaluation of the Naira. I need to be convinced that there is need for the country to devalue the Naira. Is it against the dollar or pound?
“We have our priorities. To provided money to fund the projects we have already outlined, and not for those who want hard currency to import textile and toothpick.”
This statement is quite worrisome for a lot reasons. First, it confirms once again that the current CBN Governor does not have full independence and cannot be counted upon to take decisions that are considered right for the economy even if they are not populist. By saying that he needs to be convinced on whether to devalue or not, he is implying that such a decision cannot be taken without his approval.
Second, his response is in line with several comments that were made by officials of the CBN last week who also affirmed that rather than devalue the naira they will continue stifle demand. For example, he repeated that forex will only be made available to those in the productive sector of the economy and not those who need it for luxury items.
Finally, the president’s comments also confirm that nothing much has changed between the president in 1984 and the president in 2015. He believes most of the problems we have today are similar to what we had in 1984 and as such may require a similar solution.
The problems we have may be similar but his approach in 1984 cannot be the same approach in 2015. He has to be a lot more pragmatic, have a listening ear and shed a bit of his socialist ideas.
The President’s comments also give the impression that he is out of touch with economic realities and may not be willing to listen to superior arguments. It is unlikely that this president will allow the naira to float considering his disposition towards devaluation. Asking whether devaluation against the pound or the dollar seemed rather abrasive.