Debate on whether to devalue or not to devalue the naira became fiercer yesterday with Edo State Governor, Comrade Adams Oshiomhole joining the discussion.
The Governor, who did not hide his disdain for a weaker naira, said a devaluation of the local currency at this time will make the poor poorer.
Oshiomhole, who spoke at the maiden edition TheCable Colloquium with theme: The Naira on Trail: To Devalue or Not? said the rich, who constitute about five per cent of the population; portfolio investors and collaborative private sector operators canvassing for devaluation will benefit from the decision.
He said devaluation of the naira at this time when Nigeria’s productive base is very low and the desire for foreign goods keep rising will be a big mistake.
The Governor said previous devaluations never benefitted the poor and workers, whom he described as the best economists because of their prudent management of the N18, 000 minimum wage in the face of declining naira value against world currencies.
But Managing Director, Financial Derivatives of Nigeria Limited, Bismark Rewane, said naira devaluation is the answer to Nigeria’s economic woes. The economist said there is a big difference between economic drama and reality adding that people denying the need for devaluation are same people that keep stealing from the people.
He said those who want the policy to stay, same people want to steal the money. They have vested interest not to devalue, pretending to be protecting the naira adding that it is all about competitiveness because the naira can also appreciate if we get things right.
Rewane said that in the last 10 years, Western Union, Thomas Cook and others were bring dollars to the country. “The CBN said it sold $8 billion to bureaux de change (BDCs) in nearly two years but who are the owners of these BDCs? The issue is if you are a manufacturer and you get dollar at N197 from the CBN to import raw materials. There are two decisions to make. Manufacture the goods and sell as if you bought the at N310 to dollar because of the wide gap between the official and parallel market rates, or open a Letter of Credit and refuse to import. Then roundtrip the money and make 50 per cent outright profit,” he said.
Rewane said devaluation will solve such problem because it will reduce the widening gap between the official and parallel market rates. He said many of the people asking government not to devalue the naira is because they want to abuse and steal the fund, pretending to be protecting the naira.
“I can tell you, there are vested interests. They pretend to be protecting and defending the naira, but in reality, they are not. In 1987, the naira depreciated by 76 per cent and by 20 per cent in 2009. But when oil prices rose, did they allow the naira to appreciate?”
He said that after the drama of not devaluing the naira, the country will come back to reality.
CBN director, Monetary Policy Department, Moses Tule, urged government to create enabling environment and framework that support Foreign Direct Investment (FDI). He said Nigeria is still not attractive destination for FDI and called for improved investment climate for the country.
“Nigeria has the labour for industrial take-off. But consumption appetite of Nigerians which is tilted to foreign goods has taken the naira to court. We have elites that are ready to pick up all the foreign reserves to fund their consumption of foreign goods. We need to put our home in order because Nigeria remains a big economy,” he said.
Tule said that late last year when the combined foreign reserves for the West Africa was $32 billion, Nigeria contributed $29 billion of the figure still the Naira has faced serious volatility because it is the one that supplies forex for the rest of the region.
“Devaluation is sound economics if the fundamentals are right. Devaluation will come someday, when we have sound industrial growth,” he said.
Deputy National President, Nigeria Labour Congress, Issa Aremu said the CBN has a mandate to safeguard value of the naira. He said the economy, not the naira that is on trial.