Uwaleke Faults Osinbajo’s Call For Devaluation Of Naira

A Professor of Finance and Capital market at Nasarawa State University, Keffi, Uchenna Uwaleke, has faulted Vice President Yemi Osinbajo’s call for devaluation of the Naira.

Gatekeepers News reports that Prof. Uwaleke said the implications of devaluing the naira now are pretty scary. The first casualty will be the 2022 Appropriation Bill, which means the 2022 budget, predicated on N410.15 per dollar, is dead on arrival.

On Monday, Vice-President Yemi Osinbajo, while speaking at the midterm review of President Muhammadu Buhari’s second tenure in office, said he expects the Central Bank of Nigeria to devalue the naira to reflect the state of the market.

In reaction to this, the Professor of Finance and Capital Market wrote in a statement,
“The Vice President obviously means well. But this statement is capable of triggering panic buying and speculation in the forex market (official and parallel) and further complicating things for the CBN. No doubt, devaluation will force down the volume of imports and reduce the pressure in the forex market temporarily. But have we thought of the impact it would have on the pump price of fuel and the multiplier effects? How about the knock-on with regard to inflation and interest rates, especially at a time when the inflation rate remains elevated? Is a high inflation rate not inimical to investments, whether local or foreign?

“The argument that naira devaluation will incentivise foreign investors remains to be seen as other factors such as insecurity equally play a part.

“To be sure, the naira has suffered several devaluations in the recent past. It has neither solved the fundamental problem of helping to diversify the export base nor curbed unbridled imports. Doing so yet again will not change anything. Rather, it’s a recipe for high poverty and unemployment levels.”

He wrote further, “Again, suggesting that the CBN should discontinue its forex demand management strategy to the effect that certain items are excluded from accessing the official window has grave implications for exchange rate and the economy. If anything, it negates the import substitution drive of the present administration.”

Prof. Uwaleke added that “The good news is that the CBN has sufficient external reserves to meet genuine demands for forex at the Investors and exporters window. This much we have been told. The CBN should continue to manage it while joining hands with the fiscal authorities to create multiple sources of forex beyond oil.”