President Muhammadu Buhari has repeatedly said that his administration will not devalue the naira despite the economic problems facing Nigeria and pressure from the International Monetary Fund (IMF).
According to Buhari, it’s not wise for Nigeria to devalue because almost everything being used in the country is imported.
“I have to be convinced before accepting the devaluation of the naira. Which country’s currency do we devalue the naira against? Devaluation is done between developed countries, in Nigeria; we are still importing ordinal toothpicks,” the president said during the Presidential Media Chat in December 2015.
“…We are not competing and exporting but importing everything including toothpicks. So, why should we devalue our currency?” Buhari repeated in February 2016, during an official trip to Egypt.
However, according to economist and research analyst, Chuba Ezekwesili, devaluation is not as evil as the president is painting it to be.
“The major fear of devaluation is price increase, but the market is already running on higher prices. Everyone is adjusting. Devaluation will always cause inflation, that’s standard economics, but…we devalued last year yet our inflation rate is still 9.6 percent,” Ezekwesili said while appearing on Frankly Speaking With Jola Sotubo.
“It [Devaluation] allows government to focus on what’s important. The government is too fixated on the value of the naira as a thing. But that’s not the end goal, the end goal is productivity.
“The question of devaluation doesn’t get to the real point of why we are where we are. The naira is where it is simply because there’s an export/import imbalance.
“People are shouting “we import a lot”, which we do, but compared to other countries, we actually don’t. The difference between us and other countries, like the United States, is that they export a lot too,” he added.
Ezekwesili also advised on the need for Nigeria to develop an export-oriented mentality and focus on producing local goods which meet international standards.