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Thursday, 11 February 2016

Why Devaluation of Naira is no way for Nigeria -Expert

Devaluation of a country's currency is an economic measure that is outdated, according to Kunle Rotimi, an expert on Human Capital Development.
Mr Rotimi stated this on Thursday in Lagos following the heated debates by invited contributors and participants on the topic over devaluation of Naira being organized by Cable Colloquium.
"Only backward countries with low rated leaders devalue their currencies" Rotimi asserted.

Governor Oshiomole stated that no economists are more knowledgeable than the poor as Nigeria professionals just engage in the most weird speculations about devaluing the naira.

The debate event beamed live to the public by Channels TV was held at Civic Centre, Victoria Island by The Cable Colloquium. The debate with business men, women and top dignitaries including the Edo State Governor, Adams Oshiomhole, former Vice President of Nigeria Labour Congress (NLC) Issa Aremu amongst others lasted almost three hours on the topic raised many issues around the state of the Nigerian economy as participants delved into the most critical aspects. 

Kunle Rotimi
The panelists also tackled issues surrounding the Exchange Rate.
The debate titled ”Naira On Trial: To devaluate or Not?” had business tycoons, professionals, analysts, among others in attendance.
The keynote speakers took turns to share their insights on the topic focusing on the merits and demerits of devaluating Naira.
L-R: director, research and advocacy, Lagos chamber of commerce & industry, Vincent Nwani, director, CBN monetary policy department, Moses Tule, CEO, financial derivatives, Bismarch Rewane, , Edo state governor, Adams Oshiomhole, deputy national president, Nigeria Labour Congress (NLC) Issa Aremu and and CEO, Business Day newspaper, Frank Aigbogun              Photo: Emmanuel Osodi
The speakers include Governor Adams Oshiomhole of Edo state; Bismarck Rewane, chief executive officer, financial derivatives, Issa Aremu, deputy national president, Nigeria Labour Congress (NLC), Moses Tule, director, CBN monetary policy department, Frank Aigbogun, chief executive officer Business Day, and a representative of  director general Lagos chamber of commerce and industry.
Giving his keynotes address, Governor Oshiomhole said there is a need to address the fundamentals problems ravaging the Nigerian economy. He emphasised that the issue is not about devaluation or appreciation of the Naira alone but also the uncontrollable appetite of Nigerians for imported goods.
 ”The question is will devaluation of the Naira curb our appetite for foreign goods?. Research has shown that prices in the Nigerian environment does not curb appetites for foreign goods. The last time the CBN devalued from N158 to N198 around 2014 as a matter of fact export declined by 34. 1 % and import increased by 2.9 percent after that devaluation.
”Now i can imagine the reason why you have this abnormality is that when human being do not labour to earn, they do not spend rationally. And because they were so much money and this period coincided with the elections and the period the politicians would do all they have to do.
Gov. Adams Oshiomhole delivering his key note addressThe Lagos based consultant, Kunle Rotimi in his reaction monitored on the social media, stated that "UK imports exceed its exports, yet pound is higher than dollar in value! Devaluation reduces purchasing power of citizens and purchasing value of the legal tender!

"Nigeria is three times the size of Britain uounz population, we have surplus market for finished products! If we don't import any .goods, foreign exporters will look for Nigeria to sell their products!
"And we get revenues in duties!

The expert continued; "Instead of devaluing naira, demands for forex should be reduced.
"Despite Euro economic crises, the UK £ has not been devalued''

Mr Rotimi gave following suggestions however in support of his argument.

"How should we reduce dollar demands?
1. Make debit and credit cards in naira accounts active for foreign business transactions.
2. Place over 500% tariffs on imports which can be produced locally!
3. Ban foreign bank accounts owned by Nigerians who reside here.  The funds should be in Nigerian domiciliary accounts of owners!
4. Public office holders and their families must not patronize foreign hospitals, schools, products and services.
All these will increase foreign reserves of Nigeria! "
"But when CBN Governor and MD's of DMB's have foreign banks accounts, and their children and wives patronize foreign hospitals, schools and products, the worst the naira value, the more their unpatriotic profits!
"Even our President Buhari's children are schooling abroad and he has just returned from medical trip.  abroad!
"It is unreasonable to  devalue naira when we have human and natural resources more than countries with higher currencies' value!
"Those who advocate for devaluation of naira are selfish financial rats, who have large amount of dollars in their stores and vaults!
"If the characters are to buy dollars with naira, they will advise and want dollar to be N5 to $1.
"But because they have pwlanted  "mallams" by the roadsides selling pounds and dollars, naira can die!
"The stocks of foreign currencies at the disposal of these black marketers exceed what commercial banks have!
"Have we asked where the riff-raffs at black markets get their forex?
"Have we asked why EFCC and police have not arrested any of the  "mallams" for the financial and economic crimes, currency trafficking, they commit daily at various streets in Nigeria openly?
"Have we asked Godwin Emefiele and his economic vampires why coins are not in circulation and yet the CBN lies that inflation rate is 9.4%?
"In the UK, the MPR is 0.5%, making lending rates at banks accessible at 3-5%pa. This low rate increases tax to GDP ratio higher in the UK! It reduces unemployment!
"But here CBN puts MPR at 11%, making banks interest rates as high as 30-60% including charges!
"How will naira have value under these economic and political saboteurs?
"Oshiomhole may be right if he is honest in his disposition on naira value!" He concluded.

Kunle Rotimi, is a Consultant at Soreb Consulting based in Lagos.

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