President Buhari’s statement on devaluation suggests that the CBN is not independent
The president of Nigeria, Muhammadu Buhari, during his visit to Kenya on Wednesday, said he was not going to devalue the Naira amongst other measures put in place to save the economy. This announcement is rather shocking to many Nigerians and economic experts who see the statement as a clueless drive for the economy.
Since the fall of the Naira in 2014, Nigeria has struggled to save its economy. The country is faced with a constantly depleting foreign reserve and, as the value of the Naira falls to an all time low in 43 years, banks in the country struggle due to stringent restrictions placed on the currency market. Bureau de Change operators were also instructed to look for dollars through autonomous sources, a move which has pushed several businesses to the brink of folding up. Business owners are also complaining of the increased cost of buying goods and customers’ unwillingness to pay extra for particular products.
While speaking at an interactive session with Nigerians living in Kenya, President Buhari reiterated his stand on the devaluation of the Naira and strong currency restrictions saying he requires more convincing before agreeing to devalue the Naira. He said a devaluation of the Naira would “kill the Naira, cause higher inflation and hardship for the poor and middle class in Nigeria.”
In an interview with Ventures Africa, Alan Cameron, economist at Exotix said, “It shows that there is not a lot of actual central bank independence when it comes to monetary and foreign exchange rate policies for a president to come out and make such statement.”
The country went through this situation in the 80s during President Buhari’s administration. During that time he refused to let the market set the value of the Naira, instead, he restricted imports, which led traders to hoard their goods causing scarcity. This consequently led to the collapse of the growing industries in the country.
“The argument that it would hurt poor people is not a valid argument, in our view, because most poor people are already facing the black market rate,” said Alan.
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