Muda Yusuf is the Managing Director of the Centre for the Promotion of Private Enterprise (CPPE). In this interview with THE WHISTLER, Yusuf spoke on how voting the right candidate in the 2023 presidential election is critical to fixing the Nigerian economy.
Yusuf, who is the immediate past Director-General of the Lagos Chamber of Commerce and Industry, also spoke on some of the policy summersaults of the Central Bank of Nigeria under the President Muhammadu Buhari administration. Excerpts…
With the state Of Nigeria’s economy, what Kind of aspirant should Nigeria vote in 2023?
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Nigerians need to ensure they vote for leaders that can put the right people in the right places. The President doesn’t have to be an economist, but he must have that sense of judgement to ensure that you have round pegs in round holes.
The leader they should vote for is the one that must ensure that on matters relating to the economy, he uses more technocrats than politicians. Somebody who also believes in having a proper coordination of all the economic policies.
On the aspect of coordination, how would you rate the Buhari led administration?
Right now, there is no coordination. The Ministry of Finance is doing its own, the Central Bank of Nigeria is doing its own, the Nigerian National Petroleum Company is doing its own, the Federal Inland Revenue Service is doing its own and the Customs is doing its own.
There is no coordination. CBN is doing something on agriculture and the ministry of Agriculture is not even involved. You are building a pyramid, the ministry of Agric is not even involved, the ministry of water resources that normally provides irrigation is not involved. Is it only money that will grow the rice?
One of the difficult aspects of the monetary policy allegedly mismanaged by the CBN under Buhari is on Foreign Exchange. How do you assess the CBN on this?
Forex is becoming increasingly scarce and it is a reflection of the lack of liquidity in the forex market. It shows that the situation is getting a bit more serious that is why the CBN is coming up with that kind of policy (rationing of dollar).
All of these are a reflection of the dysfunctional foreign exchange policy framework. That is what is causing all of this. When the exchange rate is far below the equilibrium rate. This is what is causing all this crisis.
So, there is now a lot of pressure on them (CBN) they now have to resort to rationing. If you ask for $10,000 maybe they will give you $1,000 or $500. What are you going to do with it? Everything is a result of the liquidity crisis in the forex market and the liquidity crisis has been compounded by the forex policy itself.
When you go and fix the exchange rate below equilibrium, for instance the parallel market rate is N580 and official rate is N416, is that not a crisis already?
Why do you believe fixing the exchange rate is a crisis?
It is a crisis because, first you will encourage round tripping for those who are able to get forex from the official window. They go and sell it at the parallel market window. Is that not more profitable than going to do any other business? Which business can give you that kind of margin?
Secondly, for those who are bringing in forex officially, you bring in forex at N416, will you bring it in when the parallel rate is N580? So that is how they go underground and some people just keep away. Foreign investors will say ‘I can’t take my foreign exchange to this country because the rate is not a realistic rate.’
So, you are blocking supply. Even some exporters here are not ready to surrender their money. How can you export and they say you should take N416, will you surrender your export proceeds? So, it is creating supply bottlenecks.
Some experts want the CBN to operate a floating exchange rate regime. What is your proposition?
My proposition is that we should adopt a flexible exchange rate policy regime. Let me clarify that this is not a devaluation proposition. Rather it is a pricing mechanism that reflects the demand and supply fundamentals in the foreign exchange market.
It is a model that is sustainable, predictable and transparent. It is a policy regime that would reduce uncertainty and inspire the confidence of investors. It is a policy framework that would minimize discretion and arbitrage in the foreign exchange allocation mechanism.