Nigeria: Don’t Blame Emefiele for Depreciation of Naira, Says Group
The Nigeria Patriotic Quest (NPQ), a group of Nigerian professionals, mostly based in the Diaspora, committed to persuading Godwin Ifeanyichukwu Emefiele to run in the presidential elections come 2023, yesterday said the Central Bank of Nigeria (CBN) governor should not be blamed for the depreciation of the value of the Naira.
NPQ, in a statement signed by its Coordinator, Ahmed Ja’Usman Tijani, said rather than blame Emefiele, he should be hailed for ensuring that the naira has not depreciated beyond its present value.
According to NPQ, the weak economic base of the country that is import dependent, among other factors, are responsible for the weak naira.
The group said: “The persistent and drastic drop in the price of crude oil starting from 2015 up till the end of 2020 dealt a heavy blow on the Nigerian economy because its mono-product export nature. Some of us may recall that by end of March 2020, Nigeria’s Brent crude was averaging $25 per barrel with Bonny Light even doing worse at $21 per barrel. We should not forget, that it was at this time that several cargoes of Nigerian crude oil were sailing the high seas with no takers. We should further, bear in mind that this was at the time when Russia and Saudi Arabia were engaged in the mutually destructive oil price war that wreaked havoc on the economy of most oil-producing nations, especially Nigeria.
This situation affected the inflow of dollars into the economy and as can be expected led to the drop in the value of the Naira, due to a surfeit of Naira pursuing very scarce dollars. To put this in stark relief, the nation’s foreign reserves plunged from a high of $47 billion in 2012 to about $33 billion dollars in 2020.”
NPQ said Emefiele and his team at the CBN should be given credit for how they managed the national economy at this very troubling time without it collapsing totally.
“The COVID-19 pandemic also dealt a heavy blow on the economy, as a result of the lockdown of most areas of national life and the resultant negative impact on productivity and employment. This impacted the Naira adversely due to the near drying-up of forex inflows from oil and non.oil sectors. Another major factor affecting the value of the Naira is the nation’s very poor industrial and productive base.
We are an import dependent economy, as we import most of our major consumer and industrial goods including food, toiletries, textiles, cars, machineries etc. This resulted in very high demand for dollars in the face of ever dwindling forex inflows. Of course, this also impacted the value of the naira negatively,” the group said.
PQ explained that in 2021 when the price of crude oil began to recover appreciably, one would have thought that it is time to shout “uhuru.,”
“However, this was not the case, as we were not in a position to benefit from the high prices as a result of our low oil production capacity. We have consistently been unable to meet up with our OPEC production quota of 1.8 million barrels per day due to persistent vandalisation of oil pipelines and facilities. Coupled with this is the blatant stealing of sometimes over 60 per cent of crude production. This has meant that our production has hovered around 1.3 million barrels per day, unlike in the past when Nigeria had the capacity to produce up to 2 million or more barrels of oil per day.
It was recently revealed that on a survey of a 12 km pipeline section, 300 theft points were discovered, this amounts to one theft point every 40 metres. No oil company or indeed nation can survive this rate of theft of it’s resources, outside the huge costs of repeatedly repairing these facilities. This is why Nigeria has not been able to benefit from the current high oil prices, sometimes in excess of $100 per barrel.
Instead, what we have harvested from this, as a result of theft and disgraceful lack of refining capacity, is imported inflation as we are forced to import refined petroleum products at the high prevailing international prices with the associated high petroleum subsidies.These subsidies could have been invested in other productive sectors of the economy such as agriculture, industries and infrastructure, had it been we were able to fully leverage the benefits of being an oil-producing nation. As it stands now Nigeria sadly, cannot take advantage of the current boom in oil prices. The Naira definitely cannot fare better given such dire circumstances,” it said.
NPQ noted that despite our low dollar earnings, Nigeria still expends a disproportionate portion of our forex in funding medical tourism, foreign education and other services as a result of the poor state of most of our health and educational institutions.
“As we speak now, ASUU is still on strike and nobody knows when the issues will be resolved. The continuous demand on the limited dollar reserves of the nation will continue to assert pressure on the value of the Naira leading to devaluation,” it said.
NPQ noted that all the issues that have negatively impacted the value of the Naira, non is within the direct purview or supervision of the CBN.
“Despite these obvious facts, the detractors have gone to town heaping all the blame for the present state of the Naira on Emefiele.
They have mischievously refused to acknowledge the fact that the present CBN under Emefiele has gone out of its way in search of solutions to the numerous problems facing the economy. These efforts have manifested in the diverse and very innovative intervention programmes cutting across agriculture, industries, energy, infrastructure,” it said.
Speaking on the solutions, the group said technology-driven security measures should be deployed to stop vandalism oil production facilities and theft of crude oil.
“Implement policies to enhance the local production of most consumer goods, including motor vehicles. Improve our health care facilities at all levels in order to reduce the current huge amount of forex expended on medical tourism. Address the persistent issues around our educational sector by improving the quality and standards in our educational system. This will reduce the need for many students to seek admission abroad. Resolve the crises affecting electricity, security and transport infrastructure. All these will help in boosting productivity across agriculture, manufacturing and other economic sectors,” the group said.
NPQ stressed that the way and manner Emefiele has managed to combine the traditional duties of the CBN with interventions in the major sectors of the economy are the reasons for its unflinching support for him to contest the presidency of Nigeria in 2023.
“We are staunch believers in his capacity, given the impact he has made in diverse areas of the economy. We assert, with all sense of responsibility, that without these critical interventions Nigeria would have been in a more precarious economic situation than we are now.
Could we imagine if the right investments were not made in agriculture, especially rice, at the time it was made, how would we have been able to finance the rice armada from Thailand given the present situation of our economy? We implore all patriotic Nigerians to judge Emefiele by his concrete achievements as CBN governor rather than listen to the discordant sounds from the echo chambers of detractors and political mercenaries.
We strongly believe that Emefiele, if given the chance, will replicate his achievements in CBN on the national stage to the benefit and satisfaction of all citizens and residents of Nigeria,” the group said.