Chief Olusegun Obasanjo NOTE: Editor's Opinion
Carefully reading through what Atiku Abubakar called his idea of solving Nigeria's problems, it is nothing but a capitalist idea that will further jeopardize the fate of this country in the future.
Aside from the fact that he closed his eyes to other problems facing Nigeria and centralized his idea on FOREX, his idea will further introduce unaccountable subsidies at the FX, and the unfortunate part is that the subsidies will be perilous.
With Atiku's proposal, the Central Bank of Nigeria may claim it subsidizes the dollar at different rates more than ten times, daily, because he agreed there would be floatation of naira against the dollar but it would be a managed-floating.
However, Atiku himself agreed that the managed-floating of Naira would experience daily fluctuations but CBN would come in.
Take note of his capitalist idea, it was after he mentioned CBN coming in to regulate the FOREX fluctuations that Atiku talked about the Nigerian Foreign Reserve.
Like it or not, under Atiku's capitalist idea, Nigeria's foreign reserve would be completely wasted on his managed-floating capitalist idea and this would further jeopardize Nigeria's economy.
Sincerely, however arguably, critically streamlining Atiku's proposal, it could be agreed upon that he knows there is no how Nigeria's economic problem is solved without the residents paying for it, this is behind his managed-floating capitalist idea. He seemed to be aiming to deceptively lessen the hardships whereas, just like the oil subsidies regime devastated the Nigerian economy, Atiku's managed-floating would have been another disaster.
Unfortunately, it is worrisome why Atiku Abubakar centralized his idea on dollar/naira rates while he closed his mind on Insecurity, production, Oil, and Sabotage when proffering solutions for Nigeria's economic transformation and the challenges.
Bola Ahmed Tinubu, President of the Federal Republic of Nigeria
One would be worried if Alhaji Atiku was still selfish at that juncture, proffering solutions to only the aspect of challenges that affect him, directly.
Most importantly, Atiku's proposal affirms the administration he led, do not forget he handled Nigeria's economy during his reign as the Vice President to Chief Olusegun Obasanjo, lured Nigeria Into this mess.
Before you argue, recall that Atiku, throughout his proposal, never referenced what he or any other former leader had done to address these challenges when they were in power.
Not that Atiku does not know what is right, with his experience in government, he understands better, unfortunately, Atiku is either playing politics or being selfish.
Reacting to the latest meeting summoned by President Bola Ahmed Tinubu to resolve the economic hardships faced by Nigerians as a result of the economic transformation agenda of his administration, famous opposition leader and presidential candidate of the People's Democratic Party (PDP), Alhaji Atiku Abubakar, came up with his preferred economic policy while condemning the policy embarked on by the President. Atiku's proposed economic agenda read:
At a meeting called at his instance on Thursday to address the Foreign Exchange crisis and the problem of economic downturn, among others, Bola Tinubu failed, yet again, 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 Abubakar
Rather, he 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 wrong policies of the Tinubu administration continue to cause untold pain and distress on the economy and the rest of us cannot keep quiet when, clearly, the government has demonstrated sufficient poverty of ideas to redeem the situation.
If the government will not hold on to their usual hubris, there are ways that the country can walk out of the current crisis.
After a careful assessment of the state of our economy at the twilight of the last administration, I knew full well that the economy of the country was heading for the ditch and came up with a number of policy prescriptions that would rescue the country from getting into the mess that we are currently in.
Those ideas, encapsulated in my policy document titled: My Covenant With Nigerians made the following prescriptions:
1. I 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.
2. 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 the 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!
3. 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.
4. Why control, you may ask.
(i). Nigeria has insufficient, unstable, and precarious foreign reserves to support a free-floating rate regime. Nigeria’s reserves did not have enough foreign exchange that can be sold freely at fair market prices during crises.
(ii). Nigeria is not earning enough US$ from its sales of crude oil because its production of oil has been declining. And,
(iii). Nigeria is not attracting foreign investment in appreciable quantities.
These are enough reasons for Nigeria to seek to have greater control of the market, at least in the short to medium term when convergence is expected to be achieved.
Tinubu’s new policy FX management policy was hurriedly put together without proper plans and consultations with stakeholders. The government failed to anticipate or downplay the potential and real negative consequences of its actions.
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 will begin to find a footing again.
NOTE: Editor's Opinion
Category: World-News
Tag: How Atikus Capitalist Idea May Further Jeopardize Nigerias Economy If Tinubu Listens
Written by Author (author)
Published 2/19/2024 10:41:16 AM