Renowned Economist Urges Nigeria to Abandon Naira Floating Policy, Citing World Bank and IMF Concerns
Renowned economist and author, Dr. O.A Lawal, has urged the Central Bank of Nigeria (CBN) to reconsider the Naira floating policy, which was introduced on the advice of the World Bank and the International Monetary Fund (IMF). Dr. Lawal argued that the nation’s economy is unable to handle a fluctuating Naira and warned that the World Bank and IMF’s recommendations could potentially ruin the currency.
In an interview with the Nigerian Tribune, Dr. Lawal proposed the adoption of a managed currency system instead. Under this system, the exchange rate would not be fixed, but it would be allowed to fluctuate within narrow limits. According to Dr. Lawal, this would prevent excessive arbitrage and maintain stability. He emphasized the importance of protecting the Naira from external forces that could cause inflation and instability.
Dr. Lawal expressed skepticism towards the World Bank and IMF, questioning their intentions and suggesting that they prioritize their own economies over developing countries like Nigeria. He criticized their introduction of the floating exchange system, stating that the country’s heavy reliance on imported machinery, raw materials, and petroleum products has made the Naira vulnerable to external influences.
To address the current situation and strengthen the value of the Naira, Dr. Lawal proposed several measures. Firstly, he recommended ending the importation of petroleum products and focusing on refining crude oil domestically. This would allow Nigeria to both earn revenue from crude oil exports and export finished products to neighboring countries.
Additionally, Dr. Lawal emphasized the need for an agricultural revolution, encouraging all states to develop their agricultural capacity and reduce food imports that can be produced domestically. He also highlighted the importance of changing consumption patterns, favoring domestically produced goods over imports. Furthermore, he suggested reducing the cost of governance, managing fiscal and monetary policies effectively, and investing in infrastructure development.
Dr. Lawal believes that prioritizing capital expenditure over recurrent expenditure, investing in education and vocational training, and rejuvenating moribund industries would contribute to Nigeria’s economic growth and reduce dependency on imports.
In conclusion, while Dr. Lawal acknowledges the challenges faced by the Naira and the Nigerian economy, he advocates for a shift away from the current floating exchange system. Instead, he proposes a managed currency system with narrow fluctuation limits, as well as comprehensive measures to boost local production, reduce imports, and strengthen the nation’s economic infrastructure. By prioritizing economic self-reliance and adopting protectionist policies intelligently, Nigeria can overcome its economic challenges and safeguard the Naira’s stability.
