The Central Bank of Nigeria (CBN) and the federal government have been cautioned by senator Ned Nwoko, who represents Delta North, not to take any actions that could “artificially” force the value of the naira to increase relative to other currencies.
He told the CBN to “concentrate on tackling the main issues responsible for the naira depreciation”, adding that “there is no short-cut to success”.
Nwoko spoke on Saturday in Abuja.
He emphasized that Nigeria must increase naira demand, saying that the value of a sovereign nation’s currency is the basis of international cooperation and respect.
As a country that exports commodities to other countries, including crude oil, the businessman stated that “it is imperative that all transactions on these items be conducted exclusively in naira.”
“This will incentivise buyers to seek out naira, thereby driving its appreciation due to increased demand and scarcity,” Nwoko said.
“Moreover, the foreign reserve policy warrants reassessment.
“The practice of maintaining reserves in foreign jurisdictions, termed ‘foreign reserves’, is not only objectionable but also counterproductive to Nigeria’s economic sovereignty.
“Unlike other nations like the United States, Britain, France, and Japan, which hold their reserves domestically, Nigeria’s adherence to this practice raises questions about its colonial legacy.
“If our early indigenous leaders acquiesced to this approach due to colonial influence, why should we perpetuate it? The primary rationale often cited to justify foreign reserves is trade balance maintenance.”
“Therefore, the notion that foreign reserves are indispensable for trade balance equilibrium falls short upon scrutiny”, he said.
“Rather, it can be attributed to the decline in refined oil imports following the production and distribution of refined petroleum from the local refinery – the Dangote refinery,” he said.
“Now envisage if other heavily consumed products were locally produced instead of imported. The success would be monumental and conspicuous.”
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