The Presidency and former Vice President, Alhaji Atiku Abubakar at the weekend engaged exchange of words over the state of the economy, particularly on currency fluctuation and poverty.
Atiku, who was the presidential candidate of the Peoples Democratic Party (PDP) in last year’s general elections, said that the “wrong policies of the (Bola) Tinubu administration continue to cause untold pain and distress on the economy”, adding that “the rest of us cannot keep quiet when, clearly, the government has demonstrated sufficient poverty of ideas to redeem the situation”.
But, in a statement on Sunday, the Special Adviser to the President on Information and Strategy, Mr. Bayo Onanuga insisted that Atiku “got his facts muddled up again” in an attempt to “rubbish the foreign exchange policy of the Tinubu administration”. He said the former Vice President “also failed to prescribe a better policy option to what (Central Bank) Governor Olayemi Cardoso and his team are executing at the apex bank”.
Atiku recalled that President Tinubu called a meeting last Thursday on the foreign exchange crisis and the economic downturn, but “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.
“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”.
He further said: “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 a number of policy prescriptions that would rescue the country from getting into the mess that we are currently in”.
Atiku recalled the policy document, which formed the thrust of his presidential campaign last year.
He said: “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 Foreign exchange (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.
“Nigeria is not earning enough US$ from its sales of crude oil because its production of oil has been declining. And,
“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.
“Tinubu’s new policy FX management policy was hurriedly put together without proper plans and consultations with stakeholders. The government failed to anticipate or downplayed 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 would begin to find a footing again”.
The Presidency however said that “it was not true that President Tinubu’s meeting last Thursday with the 36 state governors was centred on discussing foreign exchange crisis and currency fluctuation”.
In the statement by Onanuga, he said: “What was discussed in the main was food supply and how to drastically reduce the food prices. The Minister of Information and National Orientation, Alhaji Mohammed Idris gave a briefing about the meeting, revealing the highlights to State House Correspondents.
“One was that the meeting established a nexus between the state of security and the rising cost of food. Another was that hoarders are warehousing food, creating artificial scarcity and thus enabling the high cost of food items.
“The decisions at the meeting reflected the main points discussed: Forest rangers are to be strengthened and armed, while police are to recruit more men and the National Economic Council to deepen discussions about creating state police.
“President Tinubu also affirmed his approval for the release of 42,000 metric tonnes of grains from the national reserve. Government is also in discussion with rice millers to get another 60,000 metric tonnes. President Tinubu said he does not support price control and importation of food. Nigeria, he believes, can grow enough food to feed its citizens and spare some for export.
“The present government is executing the cultivation of 500,000 hectares for wheat, maize, and rice, in many states. Governors are expected to participate in this programme, one of the reasons for last Thursday’s meeting.
“There was no deliberation as former VP Atiku claimed on currency fluctuation. As Alhaji Atiku should know, this is the business of the Central Bank, which has the autonomy to handle the country’s monetary policies. As a matter of fact, the President enjoined the governors, in passing, to allow the CBN do its work and refrain from dabbling into what is within CBN’s purview.
If he would be true to himself and what actually transpired at the meeting, unlike the lies he spewed, we expected Alhaji Atiku to praise President Tinubu for maintaining this stance and for not interfering with the business of Central Bank.
“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’s arrival 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 powers”.
