By Abiola Olawale
President of the African Development Bank, Dr. Akinwumi Adesina, has delved into the economic crisis grappling with Nigeria, which has the Naira constantly falling against the Dollar and as well other foreign currencies.
Adesina who spoke during an interview session with the Punch said, what the Naira is currently experiencing against the Dollar is a result of the lack of confidence amongst the Nigerian people.
According to him, Nigeria has a whole value dollar more than its currency, and this has trickled down to the entire citizens with many seeking foreign currencies despite being in the country. He noted that the situation has been worsened by the lack of forex in the country’s reserves.
Proffering solutions, the AfDB President said the government needs to implement policies that will expand the inflow of foreign exchange to the country. According to him, if Nigeria can be an export-driven economy there would be abundant forex.
He explained: “No, it cannot. The slide of the naira is because people are losing confidence in the economy. That is why I was saying that the way to deal with that is to see if we can expand the inflows of foreign exchange into the country. And hopefully, I just saw what the Governor of the Central Bank is doing in terms of the Monetary Policy Committee, as regards raising interest rates. I guess that will work, probably for the portfolio investors, but again, there are other consequences it could have in terms of investment in the critical sectors that you need to grow to be able to produce more and have the kind of export-oriented-industrial manufacturing stance.
“It is a balance between short-term solutions and long-term structural things that need to be done. I believe we need to deal with the short-term but keep an eye on the long-term structural things that must be done, and I will continue to maintain that. If you have an import-dependent economy, and you have a lot of forexes like we used to have in abundance, and we were using that foreign exchange to shore up the naira, we are killing ourselves”
He explained further:”First, that way, you are making imports much cheaper because of the overvalued exchange rate. Second, you also have a situation that is killing the domestic economy, because the productions of other industries are negatively affected by that.
“Third, the non-oil economy that you need to be much more performing requires revalued exchange rate, because they are not traded in dollars, but in domestic currency equivalent. That means if your currency was much more devalued but not collapsing, you would have had a lot more opportunity to be competitive in the export of other items. It is like a flood is coming and you are trying to use your hand to stop it. Eventually, the flood will carry you and your hand away. I think we need to take a very serious look at that.”
Speaking further, Adesina opined that agriculture is one of the ways to get abundant forex. He noted that Nigeria has enough land to produce agricultural products that can feed the nation and other nations.
He continued: “Take the case of places like the Netherlands for example. About a year or two ago, they were earning over $90bn a year from agricultural exports alone. Yet, how much land do they have? South Korea was earning about $230bn from exporting machinery and other electronics. We have top brains in this country. So, being competitive in the digital industry is important. Of course, we are doing well in the creative industry and others. We need to build those platforms that allow us to have that export-oriented manufacturing stance. I remember when I came to Nigeria a year or two ago, I gave a lecture to the Nigeria Manufacturers Association, and I remember they said that they liked the solutions I gave them and would like to turn it into a national policy.”
The New Diplomat reports that Adesina is the 8th elected President of the African Development Bank Group. He was elected to the position on May 28, 2015, by the Bank’s Board of Governors at its Annual Meetings in Abidjan, Côte d’Ivoire.
Adesina is a development economist and agricultural development expert with over 25 years of international experience. He is the first Nigerian to serve as President of the Bank Group.
It would be recalled that he previously served as Nigeria’s Minister of Agriculture and Rural Development from 2011 to 2015, during which time he implemented some policy reforms in the fertilizer sector and pursued agricultural investment programs to expand opportunities for the private sector.
