Former Vice President Atiku Abubakar has been criticized by the presidency for his proposal to float the naira and allow market forces to determine its value. The presidency said that Atiku’s plan would return Nigeria to the era of former Central Bank Governor Godwin Emefiele, when the naira was artificially propped up by spending billions of dollars monthly.

Atiku’s alternative

Atiku, who was the presidential candidate of the opposition Peoples Democratic Party (PDP) in the 2023 elections, had argued that the current economic policies of President Bola Tinubu’s administration were hurting the economy and the people. He said that the unification of the exchange rate, which was implemented by the current CBN Governor Akinwumi Cardoso, was done hastily and without proper consultation with stakeholders.

Atiku suggested that a managed-floating system would be a better option, where the CBN would intervene occasionally to stabilize the naira and curb speculative activities. He said that this would increase liquidity, regulate demand, clear backlogs, and achieve rate convergence.

Presidency’s response

However, the presidency dismissed Atiku’s alternative as a return to the failed policies of the past. The Special Adviser to the President on Information and Strategy, Mr Bayo Onanuga, said that Atiku’s plan was similar to Emefiele’s policy, when an estimated $1.5 billion was spent monthly to shore up the naira, while arbitrage and round-tripping flourished. He said that this policy was detrimental to the economy and the people, and was perpetrated by people close to the corridors of power.

Onanuga said that the Tinubu administration had enacted policy reforms, especially in the hydrocarbon sector, that had improved the country’s growth prospects for 2024. He said that the CBN was implementing a raft of policies to stabilize the naira and end volatility in the market, and that this was already yielding positive results.

He cited the latest figures from the National Bureau of Statistics, which showed that Nigeria recorded a 66.27% increase in capital inflow in the fourth quarter of 2023, compared to the third quarter, before Cardoso took over the CBN. Onanuga said that this indicated massive investors’ confidence in Nigeria and the policy direction of the Tinubu administration.

He also said that the meeting between the president, his vice, and state governors last Thursday was not to discuss currency fluctuation, as Atiku claimed, but to address food supply and price stability. He said that the president had urged the governors to allow the CBN to work independently and had rejected the idea of establishing a commodity board.

Economic outlook

According to the World Bank, Nigeria’s economy is expected to grow by 3.3% in 2024, after a 3% growth in 2023. The bank said that the growth would be driven by the recovery of the oil sector, increased public investment, and improved private consumption.

However, the bank also warned that Nigeria faced several challenges, such as high inflation, rising debt, low revenue, and weak institutions. It advised the government to implement structural reforms, enhance fiscal management, and improve the business environment.

Despite the difficulties, many Nigerians remain hopeful that the economy will improve and that their living standards will rise. As one of the most populous and diverse countries in Africa, Nigeria has the potential to become a regional and global leader, if it can harness its human and natural resources effectively.

Source: Punch