The Central Bank of Nigeria (CBN) monday revealed why it refused several calls for further devaluation of naira, saying it wouldn’t have had direct impact on the country’s exports as a mono economy.
The CBN Governor, Mr. Godwin Emiefele, disclosed this in Abuja at All Civil Society Economic Workshop, with the theme: ‘Understanding the Economic Implications of the New Policies and the Role of Civil Society in Policy Advocacy and Economic Development’.
Emefiele who was represented by the Director of Financial Market, Mr. Emmanuel Ikeji, stated that: “The simple idea behind devaluation is that you make your import expensive and make your export cheaper. The whole essence is that people can now produce because your export is cheaper, but the question we need to ask ourselves is ‘what do we produce and what do we export as a nation?
“Our major export commodity which account for more than 80 percent of our income is crude oil and here that the crude oil price is determined, we don’t have a control over it. So, if we devalue, it has no impact directly on your major export, and what is supposed to be the non-oil export, we are not producing effectively.”
Continuing, the CBN governor noted that: “It means that for the industry which is also import-dependent means they have to pay higher prices for those goods which will translate to higher inflation.”
Emefiele used the occasion to explain what transpired between Nigeria and JR Morgan, saying: “What JP Morgan wanted us to do was to allow the exchange rate to be determined by the market. For us as an economy, it was going to be a little bit unpleasant, because we noticed what was happening in the market when the trading was not actually placed on real effective demands.”
He lamented that it was never mentioned in the media that three banks in the United States, including JP Morgan, were fined billions of dollars for manipulating exchange rate to the detriment of the economy, stressing that JP Morgan exited in the end of October, and Nigeria economy is still standing.
Earlier, the President, Coalition of Civil Society Group, Etuk Williams, said it was imperative to organise such economic workshop to establish a synergy that would help create an understanding on how these policy measures undertaken by the government would help drive the needed socio-economic development.
He noted that with the mounting pressure on naira as a result of declining foreign exchange earnings, it was not surprising that the CBN, as a matter of urgency, had to put in place some monetary policy measures to help stabilise the economy.
Williams noted that the recent foreign exchange restriction has attracted mixed reactions from various stakeholders.
“While some are of the view that the said policy would serve as disincentive to the Nigeria manufacturing sector and the economy, others believe that if effectively implemented, it will not only change the structure of the economy, it will also resuscitate local manufacturing and expand job creation for our citizens,” he stated.