Exchange rate control is not solution to Nigeria’s economic woes- Expert

In a bid to salvage the plunging position of the Nigerian economy across the globe many experts have proffered several policies one of which is the floating of the naira to strengthen foreign investor confidence which was projected to boost the performance of indigenous firms and in turn the value of the most populous African nations currency- the naira.

But Economist and Head, Dept. of Economics & Development Studies, Covenant University, Evans Osabuohien, Ph.D has a divergent opinion, stressing that the exchange rate of any nation is to exchange values. “A number of people think that the control of exchange rate is the answer. No. When we do not have enough values to exchange, it will keep depreciating.”

The solution he said is to enhance our productive and distributive capabilities.

Dr. Evans in an electronic message to Daily Times Capital Market Correspondent affirmed that the recent World Economic Forum’s 2016-17 global competitiveness report, ranking Nigeria as the 127th most competitive economy in the world out of 138, is topical, germane and timely.

He said “Some do have contentions regarding the ranking parameters; however, it provides the platform for global comparison and the expectations for countries that want to improve on their political and socio-economic scorecards. The low performance for Nigeria is not very surprising as the socio-economic realities looming the country give some degree of corroboration to the ranking.

Nigeria dropped three spots from the 124th in 2015-2016, and scored 3.39 points in the latest rankings, down from 3.46 in the previous report where Switzerland retained its first position with 5.81 points. Singapore and the United States also retained their second and third positions.

According to the report, “Nigeria is among the African economies hardest hit by the reduction in commodity prices, falling three places to 127th overall almost entirely due to its weaker macroeconomic environment (down 27 places) and financial sector (down 10 places).

Speaking on how Nigeria and Nigerians can turn the situation around, Dr. Evans said this can be achieved only when practical and frantic steps are taking into consideration; the earlier, the better. This is because the situation in Nigeria is not only a concern to Nigerians (home & abroad) but other countries of the world are also bothered. As a country, we need to work together as a team towards one goal – The Nigerian Project; enough of the game of passing blames.

“In essence, the diversification of the economy away from the Oil Sector to other sectors (notably: Agriculture and Manufacturing) is crucial to provide the needed multiplier effects in the economy in terms of employment and income generation.  This is because the global oil economy may not improve for some years to come given the increasing alternative energy sources in many countries of the world. For instance, a landlocked country like Malawi has started blending their fuel with ethanol from sugarcane to reduce their dependence on imported fuel.

Good enough democracy has come to stay in Nigeria. However, other fundamental issues involving governance and peaceful co-existence are very crucial to improve our global competitiveness as a country. These include: security (of lives and properties), adherence to rule of law, improving power (and electricity) supply, and enhanced infrastructure. Once these are in place, the world will take us more serious and will want to do business with us , which will make our currency gain more recognition, and as a result other sectors of the economy will be revamped.  I get somehow bothered when I hear that government is travelling around the world trying to woo foreign investors. Investors are investors! They will go to an economy where the return on their investment is secured. Thus, once we put things right, they will naturally come. Added to the above is the issue of policy consistency that is essential in garnering trust and reputation for the country.”