Fayose urges devaluation of naira
Fayose
Ekiti State Governor, Mr Ayodele Fayose has called for the devaluation of the naira following the continued fall in the value of the nation’s currency in the parallel market.
He said with the gap between the official rate of N199 and open market rate of over N400 to one dollar, the naira has already been devalued adding that President Mohammadu Buhari should stop deceiving himself and short-changing Nigerians, especially states and councils with his forex policy.
Fayose, noted that there was no time in the history of Nigeria that the gap between dollar official rate and open market rate was more than N200, stressing that it made no economic sense for the Federal Government to be calculating the country’s revenue on the basis of the Central Bank of Nigeria (CBN) official rate of N199 to a dollar while states and councils that are sharing the revenue with it run their businesses at the open market rate of over N400 to one dollar.
In a statement by his Special Assistant on Public Communications and New Media, Lere Olayinka, on Sunday, the governor urged the President to pay more attention to the ailing economy of the country instead of junketing around the world.
exchange arbitrage, Nigerians are also being duped while middle class Nigerians, the main people that are being decimated.
The governor said President Buhari was applying his 1984 failed economic policy in which prices of goods were fixed not minding the cost of supply, such that essential commodities like milk and sugar became scarce and Nigerians were made to line up in the sun to buy rationed commodities.
wasting $1 million per foreign trip, saying; “President Buhari has travelled to 24 countries in eight months, and will be spending 16 out of the 29 days in February outside the country, with over $500,000 being spent on estacode while the Presidential Air Fleet, which includes fuelling of the planes and allowances for crew members is said to be in the range of $500,000.”
“The President’s entourage obviously collects their travel allowances in dollars on official rate of N199 and come back to Nigeria to change it at the open market rate of N400. That must be the reason they encourage the President to be junketing abroad when life is becoming unbearable for Nigerians”, he said
egime of deceit must stop.”
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9 Comments
Fayoshe should be told that industrially developed countries/ nations use devaluation to protect their manufactured goods or newly established industries so as they can gain foot hold both locally and in International markets and find their ways in Stocl Markets Institutions! In Nigeria your leaders especially after the war spent their time on the seat of government aggrandising themselves for their friends and cohorts one went and paid salaries for some of the countries – that act infuriated group of his colleagues in the Military. Worst of it all was first; the indigenization policy which brought about the exedus of the already hurgoing firms and trading enterprises which could have by now developed or grown into megar industries, secondly; the SAP policy – Tund Idiagbon proposed/ decided on trade by bater approach whereby your primary industries will have time to get established to lead you onto the secondary industries! Rathere than do this – Ghana I recall adopted this path, you went on to collapse all the presumed nascent industries on top of it you created new states breaking down (disturbed the) established miscegenation and cohesive relationships that existed across the ethnic boundaries of Nigeria add to this was the devaluation also which was part of the IMF’s recommendation! This aspect of the policies broke the camel’s back as it were! Nigeria that had no industries nor infrastructures to sustain her was reduced to a position where those struggling to establish could not even place order for spare part – University lecturers and civil servant were all affected it was as bad not to think about installing or able to order for capital equipment for new Industries because of Nigerians wishing to do so could not afford the quantum (march) of Naira for the size of foreign exchange to do so! Naira it could be said was debased in effect and we are still grappling or reeling under the effect – you have no electricity, no infrastructure, no institution, no roads to move heavy equipment, virtually nothing to help you mould the characters you need for the right Orientation for development for Nigeria yet including, do I need to say this, the politicians! Look Fayoshe the much to say here is, please let the CBN carry on with what it is doing – you don’t need to pronounce the word ‘devaluation’ before you know that it has happened already and that your Naira had been debased also in that SAP mendacity!
A pity that they could not see my reasoning much earlier when I talked about what to do with Nigerians in the DIASPORA vis-a-vis what the Bank is doing now(You-win) how it could have married much advantageously with the policy by now! Goes to vindicate me in my earlier observation thus: Who do you tell in Nigeria and he/ she is willing to act and do so early!So’ let Naira carry on and we see where it can take us under this new policy, folks!
The gentleman is correct.
He should ask for his allocation in dollars and nominate his favored BDC. Not sure the good people of Ekiti will see it, but the good people left some time ago.
Does Governor Fayose know the implications of Nairn devaluation on national economy that only exports crude oil whose price is denominated in US dollar? But for once he is right with respect to the President’s junket ing around the world. The President should stay at home.
He is very accurate on the amount of trips the president is making outside the country. At a time the economy is in crisis, the president should be in the country working to improve the economy, fight corruption and ensuring that the budget is implemented and not wasted.
you argument is heavily flawed. only exporting country with local production should be devaluing their currency. It does not do Nigeria an import economy, that doesn’t produce a lot of product within its border any good to devalue it currency. what needs to happen is for the gap between the black market and official rate to be closed. people are using BDC because the supply of dollars is not enough. That is the reason dollar should be rationed and used effectively for only local production.
ive heard this severally and it does not make sense. that only exporting countries should allow their fx rates to devalue to become more competitive.
1. the fall in fx will make produced in nigeria more competitive. import substitution.
2. the fall in fx actually impacts few people, but allows them access to currency. as they love to say that most nigerians live on usd2 a day ..well 50cents now.. so the cost of firewood hasnt changed. they are not hurt.
3. we do get more naira for each bbl of oil. this would help the states balance their books. the issue is that this has to be managed carefully so as not to spike inflation. a managed band of 220/260 ..for 1 year, then 250/290… would see a steady shift.. and contain inflation.
4. the fx rate has already devalued, just out of the control of cbn.
Can some body tell me why the Nigerian government should not be pleasantly happy, make the parallel market value, the official value of the naira (forget the phrase devaluation of the naira), then scrape the so called official market. Since the presentation of the Budget on 22nd December 2015 the value of the dollar has appreciated against the naira by about 40% plus or minus 5%. This to my simplistic but practical layman understanding is that the federal government now has, for every 100 billion naira budgeted, and extra windfall of 40 billion naira available. So why are the people of Nigeria especially the Governors and local government chairmen allowing themselves to be short changed. Or is the budget not based on the foreign exchange proceed of the sale of our Oil. Note that since then Brent crude has depreciated by only 12% relatively but on a rising trajectory. The people that should be complaining I guess should be the Nigerian government bond holders or unpaid contractors as the worth of their debt has depreciated by 40% unless thy are going to be paid in dollars which is illegal.
The contractors for new projects are sure to be paid and this will translate to more economic activities not less.Civil servant will not be owed their salaries as there is now more naira available to pay sustaining their purchasing power another gain to the economy. With the resultant economic activity and growth, salaries can even be increased translating to more purchasing power another plus for the economy. Then the most important; once the government accepts the parallel market value, more investment dollars both from inside(yes a lot in domiciliary accounts) and outside Nigeria will also flood the market and stabilize the naira value while creating private sector investment and jobs, again big plus to the economy. This is the power and magic of the market based economy, yes.
Please this is not a joke. I urge Buhari to give this a go, order wise he might be shooting himself on the foot.
inflation is the issue… imported inflation. whilst the amount of naira will have gone up its value remains the same and potentially prices of may goods with high import components would go up proportionally…
..that said the governors are being cheated and are asleep.
Sometimes I wonder how people talk without thinking.This is not just ordinary politics that anyone or Fayose can talk about.It is pure economics and as you can see his comment lacked any depth or incisive analysis all in his quest to make himself the leader of opposition in Nigeria..
We will review and take appropriate action.