Former Vice President and Presidential Candidate of the Peoples Democratic Party (PDP) in the last election, Atiku Abubakar, says the manner the present administration’s Forex policy was hurriedly put together is responsible for the present state of affairs.
Atiku in a message on his X handle also insisted that even at a meeting called last week to address the Foreign Exchange crisis and the problem of economic downturn, President Bola Tinubu failed, “to showcase any concrete policy steps that his administration is taking to contain the crises of currency fluctuation and poverty that face the country.”
Atiku said instead, Tinubu told the country and experts who have been offering ideas on how to resolve the crisis that he and his team should not be distracted and allowed time to “continue cooking their cocktail that has brought untold hardship to the people of Nigeria. I don’t agree with that.”
“The Government did not allow the CBN the independence to design and implement a sound FX Management Policy that would have dealt with such issues as increasing liquidity, curtailing/regulating demand, dealing with FX backlogs and rate convergence.
“I firmly believe that if and when the Government is ready to open itself to sound counsels, as well as control internal bleedings occasioned by corruption and poorly negotiated foreign loans, the Nigerian economy would begin to find a footing again.”
Atiku said he cannot afford to keep quiet when the “wrong policies of the Tinubu administration continue to cause untold pain and distress on the economy, adding that “clearly, the government has demonstrated sufficient poverty of ideas to redeem the situation.”
He, however, said after a careful assessment of the state of the economy at the twilight of the last administration, he (Atiku) came up with a number of policy prescriptions that would rescue the country from getting into the mess the country is in, adding that he had signed on to a commitment to reform the operation of the foreign exchange market.
“Specifically, there was a commitment to eliminate multiple exchange rate windows. The system only served to enrich opportunists, rent-seekers, middlemen, arbitrageurs, and fraudsters.”
“A fixed exchange rate system would be out of the question. First, it would not be in line with our philosophy of running an open, private sector friendly economy. Secondly, operating a successful fixed-exchange rate system would require sufficient FX reserves to defend the domestic currency at all times. But as is well known, Nigeria’s major challenge is the persistent FX illiquidity occasioned by limited foreign exchange inflows to the country. Without sufficient FX reserves, confidence in the Nigerian economy will remain low, and Naira will remain under pressure. The economy will have no firepower to support its currency. Besides, a fixed-exchange rate system is akin to running a subsidy regime!
“On the other hand, given Nigeria’s underlying economic conditions, adopting a floating exchange rate system would be an overkill. We would have encouraged the Central Bank of Nigeria to adopt a gradualist approach to FX management. A managed-floating system would have been a preferred option. In simple terms, in such a system, the Naira may fluctuate daily, but the CBN will step in to control and stabilize its value. Such control will be exercised judiciously and responsibly, especially to curve speculative activities.”
