By Dennis Udoma
Economic experts in the country have called on the Federal Government, to declare a national economic emergency following the decline in the value of the Naira and, recent implementation of a flexible foreign exchange regime by the Central Bank of Nigeria (CBN).
The call was the fallout of a one-day symposium organized by the Department of Economics, University of Uyo, Akwa Ibom State at the weekend, where eminent scholars from the nation’s universities brainstormed on how to salvage the Naira.
According to them, the approach will rouse the country into action to save it from imminent collapse.
Speakers at the talk-shop took turns to deliver papers “On the Management of The Naira” and explained that, the symposium was apt to shed light on three fundamental challenges confronting the economy.
Firstly, to analyze the ‘what’ and ‘why’ issues surrounding the fall in the Naira since the adoption of the structural adjustment programmes (SAP), in the 1980s. Secondly, critically evaluate the justification for the current exchange rate regime and, its implications on the Nigerian economy and citizenry.
Thirdly, proffer alternative solutions of rescuing the Naira from further down slide.
President, Nigerian Economic Society (NES), Prof. Ben E. Aigbokhan used the occasion to challenge other professionals to also offer solutions to the economy considering its falling nature and structure, rather than governments seeking external advice from institutional economic organizations.
Though he acknowledged the fact that, Nigeria’s economy presently was a fragile one but seriously facing recession, Prof. Aigbokhan attributed the down sliding to many factors thus: high import-dependency, drastic decline in foreign exchange, double digit inflation, mass poverty, infrastructural collapse, high interest rate regime, endemic corruption/growing insecurity in the country and lack of enforcement of the rules of the system across all spheres of the Nigerian economy.
Renowned Economists and speakers among them were, Director-General, West African Institute for Financial and Economic Management (WAIFEM), Prof. Akpan H. Ekpo, Prof. Badayi Sani of Bayero University, Kano, former Executive Secretary, National Man-Power Board, Prof. Joe Umo, Vice-Chancellor, Veritas University, Abuja, Prof. Mike Kwanashi, former NES President, Prof. Akin Iwayemi, University of Ibadan and former Special Adviser on Economic Affairs, Office of the Chief of General Staff, the Presidency, Prof. Edet B. Akpakpan, corroborated the NES President on these issues.
They re-affirmed local production structure (system) and, high level consumption of foreign goods and services as fundamental problems noting that, given the structure of the Nigerian economy, the current foreign exchange policy was not a viable option for the country rather, the industrialized economies.
They also faulted the new foreign exchange policy by the CBN expressing the fears that, the exchange rate would be determined by market forces, floating would generate macroeconomic instability as financial market participants stand to gain through market speculation which would only stimulate portfolio investment (hot money), as the real or “green field” investment” which is expected to generate wealth and create employment would not be attractive due to macroeconomic uncertainty.
This they maintained would in turn have the tendency to generate further inflationary pressures, reducing the value of financial assets (wealth effect), de-industrialization and create dysfunctional institutions etc.
To protect the economy from further slide, the scholars at the end of the deliberations recommended amongst other things that; “The Central Bank of Nigeria (CBN) should review the new foreign exchange regime and opt for some form of a managed pegged system consistent with the structure of the Nigerian economy.
“That CBN should approve only institutions that meet its conditions; policy harmonization should be enforced to curb fiscal dominance and monetary accommodation, promote local production with import-substitution strategies as import bill is high.
“CBN should intervene in areas that enhances local production (development mandate) particularly SMEs, and the manufacturing sector. Bureau De-Change should not be permitted to recapture the exchange market as it will defeat on the policy objective and CBN should also buy from the market to stabilize the exchange rate when need arises.
“Managed float policy is a better option given the Nigerian economy’s current local productive capacity and over-dependence on crude oil as major source of foreign exchange earnings with its price determined exogenously driven in the global market. Create an environment for local productivity.
“That the CBN should re-focus the emphasis from managing the Naira to managing the economy as a robust economy will sufficiently cater for managing and use full employment strategy to fight inflation (investment-led strategy).
“Embark on strategic import control by determining how each import contributes to macro-economic goals of employment/growth and Imports that contribute nothing to national and macro-economic objectives should be de-listed for the list of items for which foreign exchange is allocated.
“Always take a holistic perspective to whatever policy that is to be implemented.
“Stimulate production capacity and domestic productivity through innovation to enhance export competitiveness.
“Help local producers/manufacturers with the marketability of their produce in order to penetrate the international markets.
Above all, the conference applauded the on-going anti-graft war of the Federal Government and charged it to step up the fight on all fronts; (demand and supply) sides.
It would be recalled that, the Central Bank of Nigeria (CBN) a couple of weeks ago, announced a new foreign exchange policy and listed some implications of the new development.
The implication of the new policy is that, the Nigerian currency has been floated and that there will be a single market for acquisition of the foreign currency.
Analysts, had said they expected the CBN to allow the naira to weaken around a trading band in the interbank market, while allocating dollars at a fixed rate to industries the government deems strategic.