We need to fix this emerging paralysis: calling names when people debate Nigerian policies. Samuel Nwite wrote an article summarizing IMF’s position which is that Nigeria should devalue the Naira. Many people started abusing the writer. I shared the piece, and I was not left out. The accusation: we are agents and apostles of the West who want to control Nigeria. Good People, sharing a report should not attract such venoms.
I am not a full fan of the IMF. But on this one, the IMF is right on the money. There is nothing in that report that Nigerian thought-leaders have not postulated. For years, everyone has been saying: close the gap between BUY and SELL of US dollars. The IMF just said it more elegantly with the word it has always used: devalue.
Yes before the report, Nigerians have already devalued the Naira since we are buying USD at N460 in the black market when the official rate is N380. The percentage devaluation the IMF suggested would have normalized this N380 to N462, bringing both to equilibrium. That does not mean that the IMF hates us since Nigerians have devalued the Naira already. The IMF is saying: normalize that number for all transactions: black, official and white!
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The International Monetary Fund on Nigeria: “A weak pre-crisis economy characterized by falling per capita income, double-digit inflation, significant governance vulnerabilities and limited buffers, is grappling with multiple shocks from the COVID-19 pandemic,”. Then, it went to ask for the government to further devalue the naira.
“IMF’s latest estimates suggest an overvaluation of the real effective exchange rate (applied on the current level of the official exchange rate) of 18½ percent, with the external position assessed as substantially weaker than what is consistent with fundamentals and desirable policy settings.” IMF.
Did you notice something? The IMF is not actually smarter: they just have thicker inks to print reports. Yes, Nigerians have since decided that USD is equal to N462 in the black market irrespective of whatever CBN is doing. The IMF wants the government to come to that number. Of course, it is a moving target, once CBN comes there, black market moves to N520.
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Yet, as I noted in my commentary: there is no need of devaluing the Naira since it is a moving target. By the time you hit official rate of N460, the black market moves to N520. This is like same-pole magnets: Nigeria’s official and black forex rates cannot attract each other until we can produce and export things.
Yes, fighting for Naira will not come via financial engineering at Nigeria’s central bank headquarters but rather at factories and warehouses in Aba, Kano, Lagos, Jos, and more. That is the message we need to push across to CBN and IMF: do not just focus on helping Naira, rather, focus more on helping manufacturers. If you help them, the Naira will be fine. Naira’s problem is not lack of financial engineering, but productive technical engineering in markets across Nigeria.
This is my defense before those guys abusing an innocent village boy like me who simply shared what IMF published. I am not an apostle for the IMF to take over Nigeria. There is nothing in that report we do not say daily: why should Dangote buy at N380 when Tekedia pays N460? Haba!
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