Nigeria: We Will Stabilise Naira, Says New Economic Team

Abuja — The Presidential Steering Committee on the Global Economic Crisis yesterday said it had mapped out strategies to stabilise the naira, which has lost N30 against the United States Dollar in last seven weeks.The news about the renewed plan to strengthen the naira came on a day the currency appreciated by N2 against the US dollar.The committee, which made its plans known at its inaugural meeting in Abuja, said the foreign exchange market would be adequately funded.It said in its agenda that it was also looking at agriculture, infrastructure and roads and that it would review issues pertaining to petroleum.

Briefing State House Correspondents yesterday on behalf of the committee, Central Bank of Nigeria (CBN) Governor, Prof. Chukwuma Soludo, warned currency speculators that they would get their hands burnt.

Soludo, who was accompanied by the Minister of National Planning, Dr. Shamsudeen Usman, Gover-nor of Lagos State, Babatunde Fashola, and an Economist, Bismark Rewane, said the CBN with the support of the Federal Government was doing all it could to stabilise the naira in the next few weeks.

The CBN governor said the meeting, chaired by President Umaru Musa Yar’Adua, brainstormed on some issues and areas the committee members consider pertinent to Nigeria with a view to making the country continue to have a robust economy in spite of the economic global crisis.

He said: “The committee laid out the work programme and will be meeting again next week Tuesday to continue its deliberations to review issues pertaining to petroleum subsidy and the issue of fair prices for petroleum prices, the issue of the recent turbulence in the exchange rate of the Naira, the issue of adequate credit going to the required sectors of the economy that will be necessary to oil the wheel of the economy itself. The issues of tariff, taxes, customs, investments in key sectors such as infrastructures, agriculture and so on and so forth. The programme also contains a whole gamut of measures and proactive measures that will be necessary not only to maintain stable economy but to also ensure the Nigerian economy is not adversely affected.

“One key out come of this is to reiterate what we said two days ago with regards to the exchange rates, namely that the CBN remains very committed to having a stable exchange rate regime in Nigeria and that those who have speculated on the Naira, who have gone to buy the dollar at a very exorbitant rates will keep loosing money. We are taking serious measures to strengthen the Naira and to stabilise it at a rate that is reasonable at the shortest possible time.

“As you would have read in the papers today, the CBN has migrated back to Retail Dutch Auction System, where individual companies, banks will now bid only on behalf of their customers for legitimate transactions and we are taking measures to curb speculations in the market and to give a general reassurance that we remain committed to having a stable exchange rate regime and that Nigerian currency will continue to remain stable.”

On why the naira has continued to depreciate, Soludo blamed it on speculation and fear.

“I think the key point to be made here is that much of the recent depreciation of the Naira is being driven by speculation and fear. Some people even began to speculate about an amount that it will depreciate to. Therefore people became a self fulfilling prophecy, those who needed foreign exchange in the next one year decided to come to the market now and buy. I think it was Minister Lukman that used a very good metaphor to describe it, as jerry can mentality.

“When you have a half tank of fuel and you see a queue, you begin to panic and say that there maybe fuel scarcity so you decide to pack and buy to fill your tank and even into your jerry can even though you do not need it at that time. And by the time everybody begins to queue up and buy what they do not need they create fuel scarcity. And I think that is what has happened in the last few weeks, fear and panic and people were not quite sure. And what I want to say is that, the Naira is going to strengthen, those who are buying at N160 and above will lose money.”

Asked to list out measures to ensure the effectiveness of the committee’s plans, the CBN Governor said: “We are taking measures to first of all take away the speculations from the market, make sure the market is well funded. For the last two or three days, I can tell you that almost everything that was demanded was met. And the rate we sold was at about N150 and I can bet you over the coming weeks, you will see it steadily getting lower than that and those who are speculating on a much higher rate may use that for pepper soup”.

Also speaking, Governor Fashola said the three hour inaugural meeting looked at the various areas where Nigeria could connect the steady macro economic growth that occurred in the last few years with the micro economic, in such a way that the common man will feel the impact.

“We have drawn up an agenda looking at agriculture, infrastructure and roads. How realistic is the price of fuel today given the fact that the major source of petroleum has come down. Of course, we are going to break into sessions and come back next week Tuesday to look at very practical solutions, very useful decisions and policies that can be put in place to ensure that this goes down to the real sector of the people. We are looking at mortgages, how to stimulate the housing sector, and how best to use the pension funds to continue to sustain liquidity and to fund long term development in the economy. An agenda has been drawn up and that is the thinking of the committee,” he said.

Earlier in his opening address, Yar’Adua said the committee was set up to evolve and drive the framework for Nigeria’s proactive response to the challenges posed by the on-going global economic crisis in a holistic and coordinated manner.

He said: “Another underlying reason for this committee stems from my conviction that every challenge has within it, an opportunity waiting to be exploited and maximised.”

Yar’Adua noted that, “given the reality of the interdependence of world economies, our national economy is clearly not immune from the adverse effects of the uncertainty and instability in international currency and commodity markets. Crude oil price swings portend adverse implications for our fiscal outlook; we are witnessing falling external reserves and marked depreciation of the Naira.”

He said that efforts had been made in the past to “shore up investors’ confidence in the economy through appropriate budgetary interventions and requisite monetary policy.”

He, however, said that “in order to effectively strengthen our financial sector, protect the integrity of our financial markets, and restore investor confidence in our economy, more comprehensive practical and focused measures need to be evolved.”

He said the committee “has been set up to properly appraise the implications of the global economic crisis for Nigeria and to formulate appropriate policy responses in the short to medium and long terms”.

The steering committee, which was chaired by Yar’Adua, met for about three hours at the Presidential Villa, Abuja with Vice-President Goodluck Jonathan and four governors, Fashola (Lagos), Isa Yuguda (Bauchi), Adams Oshiomhole (Edo) and Bukola Saraki (Kwara) as well as the ministers of Finance, National Planning, and Petroleum in attendance.

Others members who attended the inaugural meeting were Chief Economic Adviser to the President, Tanimu Yakubu; Soludo; President of the National Economic Summit Group (NESG), Mazi Sam Ohuabunwa; Rewane; Mana-ging Director, United Bank for Africa, Tony Elumelu, representing the Bankers’ Committee and Chairman of Dangote Group, Alhaji Aliko Dangote, representing Nigerian Industrialists.

Meanwhile, THISDAY gathered that the naira gained N2 against the US dollars at the CBN foreign exchange intervention market yesterday.

Market operators said the banking watchdog met virtually all the foreign exchange demands and sold at the exchange rate of N148 to one US dollar.

At the inter-bank market where banks buy forex from one another to meet their daily needs, the naira also gained N1.

It closed at N150 to one US dollar as against N151:$1 last Wednesday.