Why Tinubu Should Immediately Stop Naira Floating – Sagay

A Senior Advocate of Nigeria (SAN), Itse Sagay, emphasized the urgent need for President Bola Tinubu to halt the naira floating as a crucial step in addressing the nation’s economic difficulties.

The Central Bank of Nigeria (CBN) announced in June 2023, as a part of its economic recovery measures, the consolidation of all segments of the forex exchange (FX) market into the investors & exporters (I&E) window.

With the FX market liberalisation policy, the naira experienced devaluation as the ‘willing buyer, willing seller’ model was implemented.

Following this development, the FX market has experienced sustained volatility, leading to a broader disparity between the parallel and official exchange rates.

The policy further contributed to heightened inflation levels in the country, as indicated by the surging prices of goods and services.

In a conversation with TheCable on Wednesday, Sagay expressed his belief that the federal government should have exercised greater caution in implementing the suggestions of the World Bank and International Monetary Fund (IMF) regarding the floating of the naira and the removal of petrol subsidies.

The former head of the Presidential Advisory Committee against Corruption (PACAC) criticized the removal of fuel subsidy without first promoting local petrol production and floating the naira, attributing the current crisis to these policies.

Sagay argued against unquestioningly adopting IMF and World Bank recommendations, citing examples of subsidized services in developed countries.

He advocated for scrapping the idea of floating the naira, suggesting backing the currency with assets and stabilizing petrol prices by taking over local production.

Sagay said, “I am not an economist, but I strongly believe that if the Tinubu administration had allowed local production of petrol to kick in before removing fuel subsidy, we wouldn’t have this crisis. My view is that the problem we are having today is related to fuel subsidy removal without first keying in local production and the floating of the naira.

“The IMF and World Bank are imposing their principles on us even though they themselves don’t apply it. In England, you have a National Health Service for the citizens who hardly pay anything. But here, they want us to pay for everything,” he said.

“The last time I was in the US, I wanted to use public transport. I never paid the full bus fare. My rate was subsidised because of my age. These are subsidy countries trying to eliminate subsidy from our own country. Every country the IMF and World Bank have visited and imposed their standards on, their economies have collapsed.

“So, our government needs to look at the very rigid ways they are applying IMF and World Bank prescriptions without changing them to suit our personal circumstances.

“There is no question about floating an already weak currency. The naira is a very weak currency. Why should you float it? You know that it is going to drop to the bottom of the ocean. Why should you float it? This government needs to scrap the idea of the naira float immediately. They need to cancel the idea of floating. They should take over the currency and back it up with every conceivable asset, and steady it.

“They should also take over all locally produced petrol and discharge it into the market. This will bring down the cost.”