As the downturn in the economy continues, the naira declining against major world currencies, inflation accelerating to 9.4 per cent in November and a shortage of forex, the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, met with Media Editors in Abuja in an interactive session on Sunday.
The governor’s statements did not contain new policy pronouncements or explanations that could encourage investors and citizens.
Emefiele claimed that the CBN is drafting new measures which will boost the economy and stabilise the Naira, but when asked to provide a bit more detail, he demurred. He claimed that revealing any detail will be pre-emptive and counter-productive. “Don’t ask me because I will not disclose our strategy for now,” he said.
In Emefiele’s view, the economy is being portrayed as much more negative than it truly is in comparison with other African economies. For instance, on the 22 per cent depreciation of the naira, Emefiele said it was a reasonable depreciation when compared with other emerging economies adversely affected by global economic recession.
‘’Zambia, for example, has depreciated its currency by about 48 per cent, Angola by 25 per cent while Brazil depreciated its currency by about 48 per cent from October last year till now.
‘’Our situation is not as bad as people think. When you devalue, there must be a structural adjustment. We have never followed up with structural adjustment. So, the approach we are adopting at the moment is that, having done a 22-per cent adjustment in the currency, let us structurally adjust our position.
‘’Let us say, look, stop importing rice; stop importing toothpick; stop importing tomato from South Africa; stop importing 20 million eggs daily from Africa.
‘’That’s the gist of what we are saying. We are saying Nigeria can do without these items. And the truth is that the reserves are no longer there,’’ said Emefiele.
To reduce pressure on Nigeria’s scarce foreign exchange, Emefiele advised importers to restrict their imports to raw materials and equipment rather than finished products and food. But those are positions he has publicly stated for months now, and if they were sufficient on their own to solve the crisis, the situation would not be worsening as it currently is.
“The solution to free fall of the naira is by controlling the demand for foreign currencies such as the dollar. If we are able to reduce importation, the demand for the dollar will fall automatically,” he said.
The CBN governor advised civil servants to go back to farming which is the “only business public servants are allowed to engage in is farming.” He said, “you don’t need power to farm tomato, vegetables or fish.”
A piece of good news from the governor was that the introduction of the Treasury Single Account had led to savings of over N2 trillion for the government.
Emefeile said CBN had created the enabling environment to encourage the growth of small scale businesses through the grant of soft loans to small business operators.
He said only N60 billion of the more than N200 billion soft loans meant for SMEs had been accessed so far.