The Discord In Osinbajo’s Stance On Naira Devaluation
President Muhammadu Buhari has never hidden his disdain for devaluation. He reiterated this viewpoint at a recent meeting with Council of Retired Federal Permanent Secretaries at the Presidential Villa, Abuja recently.
According to him, since he was military Head of State, he has rebuffed pressures from Development Finance Institutions like International Monetary Fund, IMF, World Bank and other proponents that the naira be devalued.
The president has also spoken at different times, reiterating support for the position taken by the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, which is that devaluation was not in the nation's interest at this time.
But recent statements credited to Vice President Yemi Osinbajo, seems to indicate that there is a disconnect between his position and that of his boss. He had, while addressing investors at a conference organised by Renaissance Capital in Lagos, said Nigeria may “substantially re-evaluate” its foreign exchange policy, as government would soon roll out a “more flexible approach” to its policy.
The VP hinted of government's planned meeting with the CBN in which “devaluation may feature.” According to him, deregulation would lead to an increase in foreign exchange supply and capital importation. More crucially, in explaining the government's decision to remove subsidies from fuel prices, the Vice President indicated his expectation that petroleum marketers would be able to source foreign exchange at an average of about N285/$1.
These are indeed unwelcome comments by the Vice President. In addition to spooking the markets, eroding the independence of the Central Bank, and leading to further depreciation of the Naira, we are worried that these discordant tunes are sending conflicting signals across a broad spectrum of Nigerians, who are the ultimate receivers of government's harsh economic policies.
Under this circumstance, people may be driven to insinuate that government may have finally bowed to pressures to devalue the naira, or the vice president is simply pursuing a hidden agenda, the aim of which cannot immediately be ascertained.
Beyond this, the presidency has proved that it is weak in the management of information that is fed into the public. For instance, the Presidency and the Ministry of Finance took similar conflicting viewpoints; on the China loan reportedly taken by Nigeria during Buhari's recent visit to that country.
While the presidential spokesman, Femi Adesina, told newsmen that the loan agreement was key on the president's visit, sources close to the Minister of Finance Mrs. Kemi Adeosun, disclosed officially that the minister was not aware of any such deal.
Even the recent hike in premium motor spirit, otherwise called petrol, was not well articulated by the president's information managers. While some government officials claimed the price hike affirmed the removal of subsidy in the oil sector, others explained it away as mere adjustment meant to ensure the products' availability across the nation. Conflicting terms like “deregulation”, “liberilisation”, “price modulation”, etc. have been freely used by top officials to explain the policy.
The vice president should be reminded that President Buhari calls the shots and sets the agenda for the administration and other members of the cabinet are expected to fall in line. Professor Osinbajo should also be reminded that he is not an economist but a lawyer.
Therefore, the views of experts should prevail in matters that affect the economy, in this case that of apex monetary regulator, CBN.
THEWILL urges the Federal Government to manage its information flow more effectively. The presidency must learn to harmonize its positions on key issues before feeding them into public domain.
A serious matter as deregulation is not an issue that should be sneaked into the society the way the VP unrolled it. We recall past government attempts at devaluation, especially the Structural Adjustment Programme (SAP) initiated in 1986 by Gen. Ibrahim Babangida, which drew sharp reactions from aggrieved Nigerians. SAP's biting effects have remained the root cause of today's weakening naira and masses' suffering.
Nigerians are already overburdened by government's harsh economic policies. Government should therefore not make the second mistake by travelling along that painful path.
Nevertheless, if the president is now convinced of the inherent benefits of devaluation to the people, it should properly communicate its views through unambiguous channels and allow the people, as custodians of the power they wield, to decide.
It is noted that at the current official rate of N197-199 per dollar since February 2015, businesses are forced to patronize the black market exchange rates, which hover around N320-350 per dollar. While acknowledging that galloping inflation is already above 13 percent, the naira should be allowed to respond to market dictates. This is why statements on the exchange rate should be left entirely to the Central Bank bosses who are well versed in disseminating this to the public.