With calls on the Federal Government to devalue the naira as a result of plummeting naira in the parallel market, Leo Stan Ekeh, chairman, Zinox Group, a Nigerian integrated information and communication technology (ICT) conglomerate, has described such calls as a needless venture.
“The prevailing circumstances in the nation’s fiscal and monetary framework aligned to developments in the global oil market make devaluation of the local currency a needless venture at this material time,” Ekeh said.
Ekeh said since the turn of the year, the country had had to contend with reduced government earnings from the sale of crude oil, with the current administration, especially hard hit by the dwindling prices of the commodity in the global market. This has prompted the Central Bank of Nigeria (CBN) to impose strict forex rules to save its reserves, while battling the pressure from various quarters to devalue the naira.
Speaking at a reception organised in honour of his 60th birthday by a select group of ICT media entrepreneurs in Lagos, Ekeh said it was too late to devalue the naira, as the move would only serve to further impoverish the masses and plunge the country into a state of hyperinflation.
“If devaluation happened mid-last year it would have made sense and encouraged inflows from investors, but devaluing now would compound our already difficult situation and investors will only wait in anticipation of a further devaluation. It will rubbish our currency forever and strengthen the purchasing power of our trading partners,” he said.
Since the troubling shortage of dollar continues to pressure the local Nigerian currency, economists see the devaluation of the naira as a necessity, especially now that Egypt, which was in a similar situation, has devalued its currency.
Talking about Egypt’s move to relieve dollar shortage with devaluation, Simon Kitchen, a strategist for EFG- Hermes, a regional investment bank based in Cairo, said: “This is a good move and it is overdue.
“People will now want to see if it is the beginning of reforms that can drive economic growth rather than a temporary move to reduce pressure.”
Rather than consider devaluing the naira, Ekeh counselled the government to explore other options that would shore up the value of the naira and make the country less dependent on imports, as it used to be in the past.
