Olushola Bello
President Bola Ahmed Tinubu and former Vice President of Nigeria, Atiku Abubakar have engaged in altercations over what Abubakar alleged is the wrong policies of the current government concerning the foreign exchange regime which has caused Nigerians serious pains.
Former Vice President Atiku Abubakar has said that President Bola Tinubu’s policy of unifying foreign exchange rates was hurriedly done without proper plans and consultations with stakeholders. Tinubu on the other hand has described Atiku’s claims as Preposterous.
According to President Tinubu’s spokesperson, Bayo Onanuga: “Contrary to former VP Atiku’s claim, Cardoso’s CBN is implementing a raft of policies to stabilise the Naira and end volatility in the market and this is already yielding some positive results.”
In a statement on Sunday, Atiku said, “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.”
The Peoples Democratic Party (PDP)’s presidential candidate in the 2023 election said he knew that the economy of the country was heading for the ditch at the twilights of Muhammadu Buhari’s administration.
Atiku said the policies of the Tinubu administration has continued to cause untold pain and distress on the economy, adding that the government has demonstrated sufficient poverty of ideas to redeem the situation.
“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 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 twilights of the last administration, I knew full well that the economy of the country was heading for the ditch and came up with several policy prescriptions that would rescue the country from getting into the mess that we are currently in.”
“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.
“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 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!
“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.
“Why control, you may ask. 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 a greater control of the market, at least in the short to medium term when convergence is expected to be achieved.”
Atiku said that he believes 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 would begin to find a footing again.”
But its response to Atiku’s statement on Forex Policy, the President said that the claims were preposterous, Stating that: “Contrary to former VP Atiku’s claim, Cardoso’s CBN is implementing a raft of policies to stabilise the Naira and end volatility in the market and this is already yielding some positive results,” Onanuga said.
The Presidency, on Sunday, described as preposterous, a claim by ex-Vice President Atiku Abubakar on the forex policy of the President Bola Tinubu administration.
However, in a statement, the Special Adviser to the President on Information & Strategy, Bayo Onanuga, said, “It is false and preposterous for Atiku to claim that CBN’s FX management policy was hurriedly put together without proper plans and consultations with stakeholders and that the apex bank is hamstrung by Tinubu’s government in implementing 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’.
“Contrary to former VP Atiku’s claim, Cardoso’s CBN is implementing a raft of policies to stabilise the Naira and end volatility in the market and this is already yielding some positive results.
“Capital importation into the country is increasing, according to the latest NBS report. In the fourth quarter of 2023, Nigeria recorded a 66.27 percent increase in capital inflow, compared with Q3, before Cardoso arrived at CBN. In Q3, capital inflow was $654.65 million. It rose to $1.09 billion in Q4.
“Alhaji Atiku will agree that the rise in capital inflow suggests massive investors’ confidence in Nigeria and the policy direction of the Tinubu administration.
“Juxtaposed with the policy options being implemented by the CBN, Atiku’s alternative of a controlled floatation of the Naira is similar to the policy of Godwin Emefiele when an estimated $1.5 billion was spent monthly to shore up the Naira, while arbitrage or round-tripping went on unhindered. Sadly, it was perpetrated by people close to the corridors of power.”
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