Senator Ned Nwoko, representing Delta North, has cautioned the Federal Government and the Central Bank of Nigeria (CBN) against implementing any measures that could artificially boost the value of the Naira against other currencies.
In a statement he personally issued in Abuja on Saturday, Nwoko emphasized the importance of addressing the root causes of Naira depreciation rather than seeking quick fixes.
He stressed that economic freedom and currency strength are ongoing endeavours, highlighting the need for a continuous review of existing policies and the consideration of new ones.
Nwoko underscored the significance of a nation’s currency value in fostering international respect and cooperation, emphasizing the necessity for Nigeria to drive Naira demand.
As a major global exporter of crude oil and other commodities, Nwoko stressed the exclusive use of Naira in transactions involving these goods.
“This will incentivise buyers to seek out Naira, thereby driving its appreciation due to increased demand and scarcity.
“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,“ the lawmaker said.
He argues that this argument is baseless when considering the small number of traders involved in importing goods into Nigeria, who make up an insignificant portion of the country’s population.
“Therefore, the notion that foreign reserves are indispensable for trade balance equilibrium falls short upon scrutiny”, he said.
The lawmaker, who is a Solicitor at the Supreme Court of England and Wales, there was the need to acknowledge that the recent appreciation of the Naira was not solely attributable to the CBN’s new measures.
“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.
“Now envisage if other heavily consumed products were locally produced instead of imported. The success would be monumental and conspicuous,” he added.
Since January, Nwoko had emphasized the importance of key actions taken by the CBN to address dollarization and ensure stability of the Naira.
The lawmaker noted that following the release of the statement, a range of strategies have been put in place to strengthen the Naira’s value.
“However, the efficacy of these measures is yet to manifest fully, as the root cause of Naira devaluation remains unaddressed.
“Until we confront the underlying issues head-on, our efforts against dollarisation will be in vain,” he said.
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