Further naira devaluation would impoverish Nigerians — experts

Economists and financial experts have vehemently kicked against any further devaluation of the naira, claiming that it would bring untold hardship to Nigerians.

Renowned Economist, Mr. Henry Boyo warned the Central Bank of Nigeria (CBN) against devaluing the country’s currency, saying it would amount to killing Nigerians.

Speaking against the backdrop of international rating agency, Standard’s and Poor’s (S&P) position that naira devaluation was inevitable, he explained that any further devaluation of the naira

would have dire consequences on the country’s economy. “It will affect Nigerians badly, kill you and make you a poorer man.

“It is wrong to say it is the low reserve that is making the naira to

depreciate.

When the price of crude oil was over $140 per barrel, when our foreign reserve was over $60 billion, did naira improve as a result?” he quizzed.

According Mr. Boyo, contrary to general credo that the fall of oil prices was the cause of the waning of the naira, excess liquidity in the economy is actually responsible for the present sliding of the

country’s legal tender.

The Chief Economist, Manufacturers Association of Nigeria (MAN), Mr. Ambrose Orushe, also argued devaluation will do the nation more evil than good.

He opined, “Devaluation will not help us. It harm us the more, because we are import dependent economy.”

He reasoned that if Nigeria had been an exporting economy, it would have been sensible to devalue the naira. “Greater percentage of the inputs that manufacturers use are imported, so if you further devalue, it becomes more expensive to import those things and the consumer purchasing power is not increasing,” MAN’s Chief Economist added.

He noted that since consumer’s purchasing will decrease and workers salary is not increasing, Nigerians would be more impoverish than they are.

Mr. Orushe, therefore, threw his weight behind CBN’s efforts at depending the naira by restricting importers of some goods from accessing forex from the interbank market, bureau de changes and

export proceeds.

He, however, stated that this has made the prices of these goods skyrocketed.

“If there are no local substitutes for the restricted products, it means manufacturers who use them would be disadvantaged,” he said.

The Managing Director, BIC Consultancy Service, Dr. Bonniface Chizea stated that those calling for further devaluation of the naira were merely speculating.

“If the recent measures with demand management have any positive impact there might not be the need for any devaluation in the near term,” he added.

According to him, the CBN is more concerned by the exchange rate at the interbank market; it is only bothered about the parallel market because “the spread increases the temptation to round trip.”

“But what if the Regulator is able to track closely developments and is therefore able to impede the flow of official dollar to the parallel market, we would therefore not have anything to worry about,”

Dr. Chizea also reasoned.

He argued that it is only external sector interests who are the vanguard of naira devaluation, saying such interests will prefer devaluation so that they are able to get more value from their investments.

“Devaluation in the current Nigeria situation is inflationary and amounts to exporting badly needed productivity, jobs, purchasing power and general well fare of our citizenry and only marginal importers are really affected by devaluation.

The major players latch on the dollar and seek it as the deer seeks running stream and are therefore prepared to access the almighty dollar at almost any cost,” the BIC boss claimed. For the Executive Secretary/CEO, Mr. Wale Abe, Financial Markets Dealers Association (FMDA), Mr. Wale Abe, the CBN should go for the best approach to manage the present forex challenge confronting the country.

“The point of interest is how do we overcome this present challenge? Let’s wait and see how the CBN manages the situation,” he said.

The apex bank has reiterated several times that it would continue to defend the naira.