21st February, 2016
Governor Ayodele Fayose of Ekiti state on Sunday joined those who have called for the devaluation of the Nigeria’s currency, the naira.
“With the gap between the official rate of N199 and open market rate of over N400 to one dollar, naira has already been devalued.
“Therefore, President Mohammadu Buhari must stop deceiving himself and short-changing Nigerians, especially states and local councils in the country with his Forex Policy,” Fayose said in a statement by Lere Olayinka, his Special Assistant on Public Communications and New Media.
Governor Fayose, who said there was no time in the history of Nigeria that the gap between dollar official rate and open market rate was more than N200, pointed out that it made no economic sense for the Federal Government to be calculating the country’s revenue on the basis of the Central Bank of Nigeria, CBN, official rate of N199 to a dollar while states and local councils that share the revenue with the Federal Government run their businesses at the open market rate of over N400 to one dollar, thereby causing business to fold up while prices of goods sky-rocket everyday.
The governor alleged that apart from breeding corruption through round tripping or foreign exchange arbitrage, Nigerians are also being duped and middle class Nigerians, the main people that grows the country’s economy are being decimated.
He said President Buhari was applying his 1984 failed economic policy in which prices of goods were fixed not minding the cost of supply, such that essential commodities like milk and sugar became scarce and Nigerians were made to line up in the sun to buy rationed commodities.
He urged the President to pay more attention to the ailing economy of the country instead of junketing around the world, wasting $1 million per foreign trip.
“President Buhari has travelled to 24 countries in eight months, and will be spending 16 out of the 29 days in February outside the country, with over $500,000 being spent on estacode while the Presidential Air Fleet, which includes fuelling of the planes and allowances for crew members is said to be in the range of $500,000.
“The President’s entourage obviously collect their travel allowances in dollars on official rate of N199 and come back to Nigeria to change it at the open market rate of N400. That must be the reason they encourage the President to be junketing abroad when life is becoming unbearable for Nigerians.
“The situation is such that Nigeria gets say $2 billion revenue in a month, calculates the $2 billion revenue on the basis of the official CBN rate of N199 and share the revenue among the three tiers of government.
“In elementary economics, the implication is that when revenue is calculated based on N199 to one dollar and the Federal Government will be declaring say revenue of N400 billion to be shared by the three tiers of government, the value of revenue that should have been shared will be over N800 billion at the open market rate of N400 to one dollar.
“Meanwhile, the three tiers of government pay salaries to workers on the basis of N199 per dollar while the workers pay for goods and services which prices are determined by the open market rate of N400 to one dollar.
“Also, Nigeria is now faced with a situation whereby funds are obtained from the official forex market (at lower rates) and diverted to other markets and sold at a higher rate by forex dealing banks and users, who make billions of naira profit just for doing almost nothing.
“Therefore, the reality that we must all accept is that we must allow the forces of demand and supply to determine the value of our currency, not administrative fiat. Most importantly, the government does not have the reserves to keep the naira-dollar rate at its official level.
“The Naira must therefore be devalued. Anything other than this will mean that we are deceiving ourselves with forced foreign exchange rates and it is my position that this regime of deceit must stop,” he said.