Home Opinion Still on the Devaluation Debate: No Magic Wand  

Still on the Devaluation Debate: No Magic Wand  



By Yakub Aliyu

There is no magic by which the Naira can be made strong unless the Nigerian economy becomes diversified and productive. The exchange rate mirrors the economy.

A weak economy and faulty economic fundamentals such as the one bequeathed by former President Jonathan(low reserves, depleted savings, huge deficits and public debt overhang, high interest rates and inflationary pressures) produce a weak or depreciated currency, because the exchange rate evolves from the movements of economic fundamentals (economic productivity, healthy trade balance and controlled government spending).


The government and the Central Bank cannot cause the exchange rate to appreciate unless its actions are supported by economy-wide actions to boost production, diversify the economic base, and expand non-oil exports. This implies that the financial sector, particularly banks must redirect the bulk of their lending to the real sector of the economy and stimulate production; the government must strengthen export promotion of  non-oil commodities for the needed foreign exchange; and the government must ensure rigorous implementation of capital projects particularly critical infrastructure.


In fact, all economic agents in the economy must exhibit greater patriotism in their actions be it economic, social, or political etc. indeed all hands must be on deck to boost economic performance and shore up the Naira exchange rate. That is the only way out.

I rest my case.

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