The current foreign exchange policy regime has been described as inconsistent with objective of growth, job creation and poverty reduction.
Indeed, the data from National Bureau of Statistics (NBS) equally noted that the economy did far better under SAP, especially in terms of employment, output growth, and poverty and in some years, even inflation.
“The current economic hardship is largely our choice and not just oil price shock. The current slump of the economy was predictable and largely avoidable,” Chukwuma Soludo, former governor, Central Bank of Nigeria (CBN), said in Lagos at the annual lecture organised by Realnews Magazine.
He described the ongoing debate on whether naira should be devalued or not as wrong debate, saying the currency should be allowed to go back to flexible foreign exchange rate to avoid over-valued foreign exchange.
“For the better part of this year, the external shocks to the economy have been complicated or accentuated by a gamut of the “tried and failed” command and control policy regime: de facto fixed exchange rate, largely fixed CBN monetary policy rate, crude capital controls, veiled form of import bans through a long list of ‘ineligible for foreign exchange,’ de facto scrapping of domiciliary account established by law, etc,” he said.
He was concerned about lobbying for forex as the new ‘oil rent’ in town. “We are literally back to a form of import licensing regime, and portfolio carrying ‘agents’ are back in town to ‘lobby’ for forex. While the arbitrary list of ‘banned’ items has left the economy haemorrhaging, those reaping the rents are lobbying to make their gains permanent, while others are lobbying to join the new rent industry.
“Oil rent is drying up and the new source of easy money is forex. With a black market premium of about 20 percent, a successful roundtrip creates instant jackpot,” he said.
According to him, Nigeria must declare a national emergency on industrialisation, as “we need jobs like yesterday. We must maximise potentials of every sector,” he said while delivering a lecture on ‘Can a New Buharinomics Save Nigeria at the annual lecture organised by Realnews Magazine.
Soludo was concerned that there was still massive capital gift, adding that there were better ways of implementing capital controls if needed, saying “I support sensible regulations on cash transactions that prevent money laundering, but not the ones that obstruct the payment system.”
He maintained that the CBN should operate independently and not to be controlled by the Federal Government.
Hope Moses-Ashike
