Floating of Naira caused hardship for Nigerians, not subsidy removal – Expert

A financial expert, Dr. Olutayo Obadina, has said that the government’s floating of the Naira is the cause of the current hardship being faced by Nigerians and not the fuel subsidy removal.

Obadina, a PhD holder in Credit and Financial Management, stated this during a news conference in Lagos on Friday.

In his address titled “The Mathematics of Fuel Subsidy: A Critical Look at the Problem and Solution in Nigeria Today,” Obadina argued that the key to reducing fuel prices and easing inflation lies in stabilizing the Naira, rather than reinstating fuel subsidies.

According to Obadina, the Federal Government should focus on reducing Nigeria’s reliance on imports by promoting exports, which would help stabilize the Naira.

He recommended bringing down the Naira-to-dollar exchange rate from the current N1600/$1 to around N460/$1, which he believes would lead to a significant reduction in fuel prices to about N450 per litre.

The real problem and ways out

Emphasizing that the current economic hardship is not a direct result of the removal of the fuel subsidy but rather the consistent devaluation of the Naira, Obadina said:

“The real issue is the devaluation of the Naira. The dollar cost of importing fuel has remained relatively stable over the years, while the Naira continues to weaken.

“Strengthening the Naira is the only sustainable solution to Nigeria’s economic problems.”

Obadina also criticized the decision to float the Naira, arguing that it has only exacerbated the country’s economic woes.

He called on President Bola Tinubu to reverse this policy and return to a fixed exchange rate, which would help stabilize fuel prices and curb inflation.

Highlighting the importance of boosting Nigeria’s exports to increase the supply of dollars in the economy, Obadina proposed the establishment of marketing boards in each state to facilitate the export of key products such as cocoa, groundnuts, palm oil, and solid minerals.

“The Central Bank of Nigeria (CBN) must determine the amount of dollars required to stabilize the Naira.

“The President should then work with the 36 states and the Federal Capital Territory to meet export targets, with support from the Ministry of Commerce,” he suggested.

He added that these state marketing boards should initially be government-led but gradually transition to private sector ownership, with the public acquiring 51% of shares within three years.

This would prevent the boards from becoming another government bureaucracy and ensure their effectiveness in promoting exports.

Leveraging Nigeria’s medical sector for export

In addition to traditional exports, Obadina suggested that Nigeria should capitalize on its medical sector by encouraging the export of doctors and medical professionals.

With many Nigerian doctors seeking opportunities abroad, he argued that the country could benefit from supervising their exports and ensuring that remittances are sent back home.

“Out of every three doctors produced in Nigeria, two are willing to work abroad. The government should manage their export to maximize remittances and strengthen the economy,” he said.

Obadina also emphasized the need for increased investment in domestic farming to address Nigeria’s food deficit.

He called on Nigerians to invest in agriculture as a means of achieving food security and reducing reliance on imported food products.

What you should know: Within the last 10 months, the Nigerian Naira has devalued by over 82%. It moved from N896 in January to N1635 in mid-October.

The devaluation of the naira is an outcome of the floating exchange rate policy implemented by President Tinubu after taking office in May 2023.