Former Central Bank of Nigeria, CBN Governor, Sanusi Lamido, has carpeted his successor’s artificial policy of shoring up the Naira warning that Nigeria, Africa’s biggest economy, is in danger of a long term slump unless the government confronts slowing growth.
Sanusi, now the Emir of Kano, in a speech he delivered in Lagos broadcast on CNBC Africa, said, “Let’s stop being in denial, we cannot artificially hold up the currency. President Muhammadu Buhari needs help on the economy.”
CBN Governor Godwin Emefiele, has taken measures such as forex ban on 39 import products to curb dollar funding since March, virtually fixing the exchange rate, even as other oil exporters from Russia to Colombia and Kazakhstan have let their currencies weaken.
Sanusi argued that the CBN’s rationing of hard currency and restrictions on foreign-exchange trading are hurting the economy.
“We are depriving certain key industries of imports. If we have to make a choice between economic growth and a devaluation, my recommendation is that we protect growth.
“Monetary officials should lower the key interest rate from a record high of 13 percent to help stimulate the economy since the government lacks the funds to boost spending in the face of lower oil prices, Sanusi said. Nigeria is Africa’s top crude producer.
“The portfolio flows are gone,” he said. “Inflation is already upon us. You have fiscal consolidation. It is time to loosen monetary policy. Otherwise we compound an exchange rate crisis for businesses with high borrowing costs and declining demand,” he warned.
In the past, these items have been produced in the country in large quantities and we think that because of the challenges we’re having with the drop in commodity prices and revenue accruing to the nation from crude oil, there is need for us to begin to produce those items in the country once again. That position still stands.
However, Emefiele at the World Bank/IMF Annual Meeting in Lima, Peru, stated that the apex bank’s decision on forex was to save the economy from sliding into recession.
He said; “We need to prioritise to make sure that foreign exchange is made available only to those who are importing essential raw materials and products we know cannot be produced within the country. That is the only way we can conserve our foreign exchange and reduce the demand for foreign exchange for the importation of some of these products we are saying can be produced in the country. And we will continue to plead and crave everybody’s indulgence, to give us the support, as we are convinced that these items can be produced here in the country.
“I have read and heard from people saying the central bank is preventing people from getting foreign exchange. Let me also say here that part of central bank’s role is to intervene in the foreign exchange market, and we have tried as much as possible to broaden the market so that those who earn foreign currency through export proceeds can also make their funds available to the market for everybody to share from.”