A former Deputy Governor of the Central Bank of Nigeria (CBN), Kingsley Moghalu has reacted to President Muhammadu Buhari’s order, directing the apex bank to ban FOREX on food importation. In his reaction, Kingsley Moghalu said the Central Bank has lost its independence.
In a series of tweets posted after the President gave the directive, Moghalu said the issue isn’t whether or not CBN should allow access to Forex for food imports. According to him, it is about whether such an economic policy should be imposed by a political authority.
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Moghalu made known that an economic policy like the new directive is a major reason for the country’s poverty and instability. He also emphasised that a weak economy begets weak institutions.
The former United Nations Officer further stressed that Nigeria’s marketplace should be regulated and guided in a rational manner that creates a level playing field.
Moghalu’s tweets read, “Our economy will not be saved by Ad Hoc political decisions like this, handed down by the very institutions that should be shielded from the whim and caprice of politicians.
“Nigeria’s entire economy appears to have been sub-contracted to our Central Bank, including industrial and trade policy. In the process, the economy has fared poorly, and the Central Bank has lost its independence. This is sad!
“@NGRPresident should leave @cenbank alone to discharge its mandate independently within the ambit of the CBN Act and stop ‘directing’ it. @cbnbank should on its part assert its independence (assuming it actually believes it should be independent, but the Act says so, clearly!).”
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Nairametrics had reported that President Buhari, in a statement, directed the Central Bank to stop providing FOREX for the importation of food into the country.
What you should know: One of Nigeria’s Foreign Exchange Windows is the Investors’ and Exporters’ windows (I&E FX Window), where investors transact foreign currencies for investing purposes. In this market, foreign currencies are usually pegged as the CBN is equally a participant.
By restricting FOREX for food, it means food importers will have to source for FOREX through the parallel market or other means.
Buying from the parallel market or other sources come at a high cost, and this may trigger the general price level and prices of food items will jack up.
Restricting FOREX for food importation is indeed a welcome development, however, the Presidency needs to cautiously approach this, as the policy may nosedive the economy into stagflation (a condition of slow economic growth and relatively high unemployment, accompanied by rising prices).
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I totally agree with Dr Moghalu. Despite the President’s best intentions, this isn’t the proper way to run a country. There are so many considerations that go into framing up economic policies or tinkering with levers. And in some cases, decisions that seem rational might not yield the anticipated results. We as a matter of urgency need to get professionals into the right offices and allow them do their jobs. There isn’t any other way to make progress. No shortcuts! No winging it!!