The United States has said it will hold talks with the Nigerian this week in order to convince the government to adopt a more flexible exchange rate to boost growth and investment.
U.S. Assistant Secretary of State for Africa, Linda Thomas-Greenfield, told an audience at the U.S. Institute of Peace that Nigeria should ensure that the value of the naira currency versus the U.S. dollar was “more realistic.”
“While most people complain about the possibility of there being a devaluation, people are already operating on a devalued currency, and the only people who are not, are people who are doing it officially,” Thomas-Greenfield said.
“Our recommendation is, and we will have discussions about it … that they should look at the exchange rate and try to make the exchange rate more realistic to what the value of the naira is to the dollar,” she added.
She spoke before talks in Washington to be launched by Secretary of State John Kerry on Wednesday and which will focus on Nigeria’s economy, security and development.
Despite all the pressures on the CBN Governor from both local and international investors, the monetary policy committee has refused to devalue the naira. Analysts believe there is only one reason for this; President Buhari and based on that, the CBN Governor dares not rock the boat. The president has also stood his grounds against devaluation and has remained consistent in his rhetoric since he became president.
Thomas-Greenfield said the parallel currency market in Nigeria was “alive and well,” warning that a rigid exchange rate, capital controls and import bans could undermine President Muhammadu Buhari’s efforts to expand economic growth and fight corruption. Buhari has rejected the idea of devaluing the naira.
“Capital controls that limit access to foreign exchange rewards insiders and undermines the stated goals of Nigeria to increase domestic production because both Nigerian and expat investors alike tell us many businesses are unable to obtain the capital to purchase badly needed intermediate goods,” she said.
The common rhetoric for the president has been rather than to devalue the naira to make it available for all sorts of imports, he will instead make it available for ‘critical’ imports of goods and services the economy needs.
Read more in Reuters
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No one should blame President Buhari for his stern action about the devaluation of the naira. Records have shown that past devaluation of the naira have proven to be unfavourable to the economy. Why not try a new approach that may prove workable and bankable! The new approach that may prove workable is the restrictions of commodities that are categorized as non essential to the populace. Advise to parents to eliminate sponsoring of their wards and children to overseas for higher education; overseas trips for medical examinations and patronage of foreign goods over and above Nigerian made commodities. In short, the President would like the average Nigerians to be fully prepared to adjust to Made in Nigeria Products. Undoubtedly, this arrangement would encourage reductions of foreign exchange and but value on naira. I would initially advise that the international communities should give adequate support to the new trends as proposed by the Central Bank of Nigeria. No foreign country should impose its ideology on how Nigeria should manage and control its economy. Advise may come, but not imposition of ideology. There are capable and well qualified Nigerians who are in positions to adequately advise the President and his Executives on how to effectively run the economy that would favour the populace. Conclusively, let us give the new trend a trial and see how effective the outcome would be on the nation. Let all Nigerians stand to the challenges put forth by the President and let us all work toward their success.