It appears the pressure on the CBN to devalue the naira will not be relenting anytime soon as the international media continues to publish articles favourable to a devaluation of our currency. The world leader in Business News and Financial data Bloomberg featured an article headlined “Pressure Mounts for Nigeria Naira Devaluation on Oil Plunge”.
However, reading through the article reveals the so-called pressure was on the back of an interview granted John Ashbourne, a London Based Economist and Economist, Alan Cameron of Exotix Partners (which describes itself as “a licensed to provide a number of different financial services but the core business activity is providing liquidity to both buyers and sellers of financial instruments.”) Here is an excerpt of their comments in the Bloomberg article;
The Central Bank of Nigeria may revise its target for the naira by about 20 percent to 240 to 250 per dollar after oil continued its decline, Alan Cameron, London-based economist at Exotix Partners LLP, said in note. The currency was unchanged at 199.05 per dollar at 7:01 p.m. in Lagos, the commercial capital.
“Cumbersome foreign exchange restrictions are strangling economic growth,’’ John Ashbourne, London-based Africa economist at Capital Economics, said in note to clients on Wednesday. “The authorities will be forced to devalue the naira in the first half of 2016.”
Critics of foreign news media have often complained of the heavy influence of ‘sell side’ analysts in their reporting suggesting that it is lopsided and often promotes market oriented policies that may not be beneficial to the country they write about. This theory was mostly buttressed in a New York Times best seller, Confessions of an Economic Hit Man (EHM) written by John Perkins. According to Perkins
Economic hit men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from theWorld Bank, the U.S. Agency for International Development (USAID), and other foreign “aid” organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet’s natural resources. Their tools included fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization.
His allegations have been hugely debunked and claimed as mostly untrue even though skeptics still believe there are elements of truth in his claims. Here is what Perkins had to say about the media in a blog post last September.
A former staff of a Western Business news website informed Nairametrics that most of the news reporting about Nigeria typically tends towards the negative as foreign investors are more interested in paying for news that expose downside risk in an economy and have more incentive to ensure that this risk is exposed and eliminated before they commit their funds.
Devalue or not?
The Nigerian Government has made it clear severally that devaluation was not an option it considered for the naira. President Buhari in the last media chat reiterated that he personally did not “support the devaluation of the Naira” and “will not will not support devaluation of the Naira”, claiming that he needs “to be convinced that there is need for the country to devalue the Naira.”
The IMF Managing Director who is in Nigeria on a four day visit also avoided calling for a devaluation of the Naira preferring to only to say “Additional exchange rate flexibility, either up or down, can help soften the impact of external shocks, make output and employment less volatile, and help build external reserves.” Many are still skeptical about her mission in Nigeria and believe she was around to discuss giving Nigerians loans even if it was on behalf of foreign investors whose interest she is more disposed to protect. Any IMF loan to Nigeria may be in exchange of policies that will surely affect the current forex policy of the government. Lagarde did assert that she was not here to give Nigerians any loan.
Bloomberg is not the only Western Media platform that has frequently carried stories sympathetic to a devaluation of the naira. Financial Times and the Economist have both carried articles on this subject with the latter even going as far as calling for Emefiel’s sack.