How Foreign Investors Might Interpret Buhari’s Latest Devaluation Gaffe
President Buhari is probably better left alone especially when it comes to questions relating to the economy. He was speaking at a breaking of the Ramadan Fast with some members of the Business Community in Abuja when he seized on the opportunity to comment on the new flexible exchange rate policy.
The president who last two weeks ‘wrote’ an article on the Wallstreet Journal supporting a “greater float” of the currency appeared to be going back to his old ways claiming that he still does not support a devaluation of the Naira.
Even though we weren’t surprised by his admission we thought it wise to psycho analyze some of his comments from the perspective of a foreign investor.
“I don’t like the returns I get from the CBN (Central Bank of Nigeria),”
Assuming he wasn’t quoted out of context, this further confirms his firm grip on the activities of the Central Bank. The Apex bank is supposed to be independent, however this President is not letting up. His meddling in the operations of the CBN is one of the reasons why foreign investors are still skeptical about the sustainability of the new policy.
“In August 1985 , the naira was N1.30 to a dollar but now you need N300 or N350 to a dollar. What do we derive from that? How much benefit can we derive from this ruthless devaluation of the naira? I’m not an economist neither a businessman, I fail to appreciate the economic explanation,”
There are quite a number of economist who do not support devaluation of the currency but we doubt there is anyone who can’t grasp why 1985 is not 2016. The president still holds on to the past like he owns a time machine. This attitude is quite disturbing and is likely a factor in his handling of the economy. The more he sees 2016 as 1985, the more he dwells in archaic policies that just don’t work. This is quite disturbing.
“What has happened to us now is that we have maneuvered ourselves into mono economy which led to the collapse we are seeing now.”
The fact that he used the word “collapse” is a huge fail in our opinion. You do not expect a President who is presiding over the largest economy in Africa to use words like “collapse” when referring to the state of the economy. Where is the confidence and sense of patriotism or even belief in the economy. There are other countries who you can consider as a mono economy yet rewarding their citizens with a better society, jobs and good quality of life. Nigeria’s problem is that of mismanagement and corruption and we expect the president to know better. Focussing on oil as a reason for Nigeria’s problem is confirming his penchant for clinging to antediluvian ideas.
Listening to the president spewing remarks like this is quite heart wrenching particularly if you consider how fragile the economy is. With foreign investors still skeptical about his intentions, this latest gaffe reinforces the impression out there that he could one day decide to reverse the exchange rate policy. If he continues to utter statements like this he basically makes it harder for his Minister of Finance to get any foreign investor to buy any of our bonds let alone invest in Nigeria. Someone needs to constantly remind the president that we are not in 1985.