Emir of Kano says naira is already devalued

dimeji akinloye

February 19, 2016 8:01 PM

Sanusi said President Muhammadu Buhari and the CBN are only subsidising the private sector by selling dollars at N200 as against the real market price.

Emir Muhammad Sanusi II

The immediate past governor of the Central Bank of Nigeria (CBN), Muhammad Sanusi II, and the emir of Kano says the argument about devaluation of naira is misunderstood, stating that the naira has already been devalued.

Speaking to BBC, Sanusi said President Muhammadu Buhari and the CBN are only subsidising the private sector by selling dollars at N200 as against the real market price.

READ: Emir Sanusi criticizes Buhari for endorsing current forex policy

“This argument (on devaluation) I think has first of all been framed wrong, it’s not an argument about do we devalue or do we not devalue. The naira has already been devalued,” he said.

“What is the value of the naira? It’s what you can get for it, what you can get for the dollar in a free market between a willing buyer and a willing seller – and it is not 197.

“All that is happening is that the government has chosen to sell its own dollars at a subsidised rate to the private sector. That’s what is happening. So, if you’re lucky, you’d get something worth N300 for N200 and you save N100,” Sanusi added.

He explained that, “for every $1 billion that the central bank sells, it has transloaded N100 billion to the private sector – that’s what is happening.

"So you got a huge arbitrage opportunity, which either way undermines the government’s anti-corruption stance.

“You also take so much money away from states and local governments, because this is money that from oil proceeds, from PPT, royalties, that should go to education and healthcare for the poor.

“While the president is looking at the pain inflicted on the poor, by high prices of import, he also needs to look at the pain inflicted on them by taking away revenue that could go into education and healthcare.”

While commending the President for transparency, removal of subsidy and other structural reforms, Sanusi said the federal government needs clarity of thinking in the handling of the foreign exchange policy.

“There has to be clarity of thinking. The government on the one hand says it wants to encourage domestic production, the governor of the central bank says he wants to reduce import dependence, but one would think that the way to reduce import dependence is not to make imports cheaper.

“You subsidize exchange rate – you’re making imports cheap. So you’re actually pursuing a monetary policy that undermines structural objectives," he said.

Also commenting the Goodluck Jonathan administration, the monarch said that the huge corruption that trailed that government was unprecedented, noting that systems have to be put in place to make it difficult for future leaders to steal.

“The thinking that has to be done is beyond looking for these people, beyond recovering the money, beyond prosecuting them. “What kind of institutional changes do we need to have in processes, in systems, that would make it impossible for the next president to do the kinds of things done in the past”, he said.

He also called for strengthened intelligence, coordination and community sensitization in the fight against Boko Haram, saying insurgency cannot end overnight.

dimeji akinloye