LAGOS – Professor Kingsley Moghalu, a former deputy governor of the Central Bank of Nigeria (CBN), has explained that that naira keeps falling in value because handlers of the country’s economy are pursuing economic policy not grounded in any clear philosophy.
Moghalu, who featured as a guest on ARISE TV’s ‘This Morning Show’, maintained that the government was yet to get the right balance between the state and the marketplace.
According to him, “The naira keeps falling in value because we are pursuing an economic policy that is not grounded in any clear philosophy.
“We have not yet been able to get the balance between the state and the market place in Nigeria, and that is why despite Nigeria crawling with brilliant economists, our economy keeps going backwards.”
The problem, according to him, is that the Central Bank is trying to control the price of the naira in the market.
“When the market itself perceives that the actual value of the currency vis a vis foreign currencies is subsidised, a massive parallel market will naturally develop and investors will have hesitation in investing in the Nigerian economy and there will, in fact, be a lot of capital flight.
“I have advocated that the naira should be valued on the basis of a market-determined flexible exchange rate, you can put in a very simple way, float the naira. It’s a controversial proposition but I say that it is better than what we are going through and it will yield results that are positive for Nigeria if it is planned properly and executed properly.
“You do not just continue to devalue the naira without reforming trade policies. You have to float the Naira to create an incentive for exports to earn foreign exchange.
“Right now so long as the naira continues to be subsidised, you are creating an incentive for an import-dependent economy which is what Nigeria has been for the past 50-years,” he said.
Speaking further, the presidential candidate of the Young Progressives Party (YPP) said there’s a lot of rent-seeking concerning the Nigerian naira driven by a greed for power by the country’s highly influential and politically connected individuals and politicians.
He added that the creation of different exchange rates for different businesses in the country for the naira has ensured there is no level playing field in the financial market.
“Nigeria’s politics is driven by a greed for power at the centre for the purposes of rent-seeking. There is a lot of rent seeking concerning the Naira.
“If you keep the Naira subsidised, if you create different exchange rates for different types of businesses for the naira, you are not creating a level playing field in the financial market.”
Source: Independent.ng
