Listening to President Muhammadu Buhari talking about the Naira, one gets a sense of a man emotionally attached to the Nigerian currency.
That’s not necessarily a bad thing.
South Africans are known to be emotionally attached to the Rand, especially when it starts its wild gyrations against the dollar.
In the USA politicians across the divide have been known to question whether the Treasury is still committed to a ‘strong dollar policy’ when the greenback suffers a prolonged period of weakness against other major global currencies like the Pound, Euro or Yen.
In the case of the Nigerian President Buhari, such Naira fixation however becomes worrying when we begin to hear him talk nostalgically about “how the naira was strong in 1984” before his ouster in a coup.
Buhari has overruled the Central Bank of Nigeria (CBN) on the Naira policy, in essence upturning the independence of the CBN.
The President is not known to be an economist. He cannot possibly understand the concept of Real Effective Exchange Rates (REER) or how the value of a currency (NGN) in 1984 bears little meaning to today’s Naira except you adjust for inflation over the period.
Buhari’s (probably illegal) appropriation of the duties of the CBN is akin to having a well meaning CEO in the first class cabin of a Boeing 737 or Airbus A300 override the captain and co – pilots and takeover and fly the airplane in spite him not ever taking any aviation classes or having a pilots license.
Buhari is the CEO of Nigeria, just as we have CEOs of major corporations like Apple and Google.
He cannot pretend to be able to do the work of the chief financial officer (CFO) in this case the CBN, just as the CEOs of Google and Apple (two companies with market capitalizations bigger than Nigeria’s GDP), cannot appropriate the role of their CFOs.
It is dangerous for all on the plane when a non certified pilot begins to fly a jumbo jet as it may begin to stall and eventually crash.
It is the same way dangerous for all 180 million Nigerian citizens when the President believes he is an economist and begins to override sound economic principles based solely on his belief that he was wronged 30 years ago.
If that scenario plays out much longer the country’s economy will begin to stall (as we can see already happening with slumping GDP growth) and in due course could crash and burn (which may come in the form of stagnation, stagflation, recession, unrest and a breakdown of law and order).
The above scenario should worry everyone, especially those in the inner circle of the President with an ability to advise him.
Leadership is not about hubris.
It is not about believing you know more than 180 million people or a majority of the free world.
It is about being humble enough to admit that you don’t know anything (especially in today’s complex global economy), and assemble a team of sound advisors to help you navigate the storms.
Nigerian are paying today for some of the Presidents ideologically as opposed to economics influenced policies in the form of fuel shortages, low productivity, high inflation, job losses, and an unnatural widening of the gap between the official and parallel market FX rates.
A leader comes to power to make the people’s lives better than he met it.
The President must understand that the inconveniences that Nigerians have faced since he came to power are a direct consequence of his policies.
I dare say this author is rather being too sentimental about trying to once again shove down the “devaluation” pills down the throats of Nairametrics audience. I hope he is not one of the many intellectual dollar speculators that abound on the cyberspace financial hub? It is not about being emotionally attached to the Naira, it is about what the short, medium and long term consequences of a decision spell for an organization(Nigeria). In the short term? Not necessarily good, no doubt, but in the long term, very fantastic I believe. Egypt is a not too far example of how not to devaluate a currency. The recent Yuan Naira agreement, coupled with a resurgence in agricultural production in the country and an industrial capacity that is currently being addressed(ENERGY), It is only a matter of time before the Naira returns to its true value which it is currently trading below.
You never addressed the core premise of the author’s article, which is: Buhari shouldn’t be making monetary policy decisions on behalf of the CBN. Sentiments aside, that is something that needs to change.
The government should stay out of monetary policy and focus on ensuring we have a clear fiscal policy that can work in harmony with the monetary policies of the CBN. There is a reason why fiscal and monetary policies are managed by separate teams working in harmony to address the same problem.