Earlier this week, the Vanguard Newspapers held a forum with some distinguished guests to discuss the issue of the falling value of the Naira. Experts in attendance included: former Minister of Finance, Dr. Kalu Idika Kalu; Director, Lagos Business School, Professor Pat Utomi who moderated the event; former Economic Planning Minister, Senator Sanusi Daggash; Mr. Jimoh Ibrahim, Chairman, NICON Group; NACCIMA President, Mr. Simeon Okolo; Mr. Opeyemi Agbaje of the Lagos Business School and Vanguard columnists, Les Leba and Dr. Dele Sobowale, among others.

In my opinion, Dr Idika Kalu hit the nail on the head – the main problem is the fact that NIgeria is too dependent on the banking industry which makes up over 50% of the stock exchange and is currently the major employer of labor outside of the government. What we need is a strong manufacturing economy.

And I very very much disagree with Jimoh Ibrahim who is suggesting that the CBN prints more Naira. That is a bunch of bull. It is nonsense. Printing more Naira will increase the risk of inflation and will sink the country into a recession. It can also result in the downgrading of our credit ratings which will affect the flow of foreign investments.

Here are some of the comments of the participants:
Prof. Soludo – The crisis is global and Nigeria is not in a recession:

The global economy is experiencing a crisis that it has never experienced before. Even the 1929 crisis was not as severe as it is now and most developing economies are being affected in ways they never expected. We have one global economy being managed by two powers. This year’s aggregate global economy will be negative because the global capital flow is frozen.”

“But Nigeria is not in recession. Recession is a technical term. Recession occurs when the economy grows negative for two or more consecutive quarters at a time. That is when you can say the economy is in recession. From what we have heard from the National Bureau of Statistics so far, there has been no quarter where we have had negative growth rate, although the economy may have been growing slower than before. But in the sense of recession, no, we can’t pronounce the economy to be in recession.

Jimoh Ibrahim – The solution is to print more Naira

…two months ago, some journalists asked me what we should do concerning the depreciation of the naira, I said let’s print more money. It may be laughable, but it is serious … one reason  I asked the Central Bank Governor go back to Abuja and print more money, since this will ease the global economic crisis. It is only in Nigeria that interest rates climb to 22 percent. The Nigerian government should follow the example of England and America where their interest rate is 0.5 percent.

Daggash – Public-private sector partnership is needed to drive the economy

The profit of banks in Nigeria are not really huge as people think. Those profits are not adequate to tackle the issue of infrastructure development, which really the country needs. The government has a central role to play in infrastructure development; it can not be left in the hands of the private sector alone.

Pat Utomi – Government must provide stimulus packages

…But if you were to realise that there is need to put money in people’s pocket so that they can spend, so that those who are producing can produce what those people are consuming. What you should ask yourself is what you should do that will automatically put millions of people to work and put money in their pockets for doing something that adds value, such as the construction of highways and houses.

It is a known fact that housing is desperately needed in the economy; this will also make it possible to employ a lot of people. In doing this, government should look for foreign investors that are ready to fund such investment. When they come and the projects are started, millions of people will be employed earning a reasonable amount of money. These people will now be empowered to spend, buying items of companies in the country, this will also make such companies to decide to build more factories, and employ more people, that is how you get an economy going.

Idika Kalu – Monocultural economy is the problem

This issue here is not just about naira and economics, the issue is also about governance, security, the administration of justice. Like I said it is not so much the gyration of the naira that is the problem, of course, the size of the adulation borders on the level of instability and therefore the decision making that it will affect from the stand point of those who want to save his money and somebody who wants to invest his money is bordering on the underlining factor of production.

The very factor of production, the first management of the productive process that has slowed down our ability to diversify the economy and in that point, let us get it out of our heads that we are a mono-economy. Nigeria is not a mono-economy, we have just woefully failed to diversify not because there is something intrinsic about the mono culture that we have.

We had a period in the forties and fifties, we had an active agricultural base and we were exporting all manner of agricultural products. We had a time in the 50s when we were exporting all manner of agricultural products to West African countries.

We should have almost one hundred items we export in this country. I have tried to make that point. The reason we are not doing more than we are doing in terms of our export capacity is as a result of the non diversification of our economy mostly because we have not made sure that we diverted our investment to improve domestic production, because we have to produce before we export. And a lot of the argument at that time was just predicated on the assumption that all we have to export was oil. But yet the potential is enormous. Wood products, leather, textiles.

Dr Dele Sobowale (Vanguard Columnist) – CBN cannot do it alone

…the depreciation of the Naira cannot be achieved through the efforts of the CBN alone. While the CBN is saddled with monetary policy, there is the fiscal policy which is the responsibility of the government. According to him, in times like this when the CBN is trying to preserve the nation’s foreign reserve there should be commensurate fiscal policy especially to discourage importation of many unnecessary items.
At a time when crude oil price has gone down and foreign exchange earnings are declining is not the time to import plates and cutleries from China. There is need for import prohibition policy measures to ensure that the scarce reserves are not used to import just anything.

Mr Olujimi Boyo – Take away CBN’s monopoly

People in the past keep on applauding the so-called improvement in the rate of Naira when we have reserves which were not only doubling, but tripling and quadrupling and instead of the Naira appreciating appropriately, what we had were marginal gains, of one kobo, two kobo, being celebrated, so to speak.

So, even our reserves have tripled, quadrupled, we only had marginal gains. That itself, is an aberration because, if we had a proper market determined by demand and supply, what we would have would not be the so called stability celebrated in the pages of the newspaper. They would not have said that the Naira was stable all that time that we had these increase in demand, they would have understood that the naira rate was rigid and resistant to market forces. What did I mean by market forces, the doubling, tripling of the reserves.

To save the Naira, you take away the total monopoly that the CBN has, which is strangulating the market, you now liberalise the market. What will be the effect of that? You now have instead of so much money thrown into the system every time the CBN substitutes the Naira for the dollar earnings of the country, you are going to have liquidity problem, and when you have the problem, the same person who put the money there, now goes back and say ‘I want to mop up’ in order to take away that liquidity. And for that purpose, the CBN or Nigerians pay N300 billion, according to this year’s budget to predominantly the banks to whom this money had been given.