Vice President Yemi Osinbajo, on Tuesday, said he never called for the devaluation of the naira following reports on his speech at the opening session of the mid-term ministerial performance review retreat at the presidential villa, Abuja on Monday.
According to a statement issued by his spokesman, Laolu Akande, the Vice President had always been opposed to the devaluation of the currency willingly. The statement explained that what Osinbajo meant was that only those who have access to the dollars at N410 but turned round to sell it were benefiting from the current exchange rate.
The Vice President had argued during his remark at the retreat that the current exchange rate was artificially low, making it difficult to attract foreign investors. He also affirmed that because of the low rate, Nigeria was unable obtain new dollars.
In what he said was his personal opinion, he had admonished the Central Bank of Nigeria (CBN) to make the rate to be reflective of the current realities.
He said on Monday: “As for the exchange rate, I think we need to move our rates to [be] as reflective of the market as possible. This, in my own respective view, is the only way to improve supply. We can’t get new dollars into the system, where the exchange rate is artificially low. And everyone knows by how much our reserves can grow. I’m convinced that the demand management strategy currently being adopted by the CBN needs a rethink, and that is just my view,” he said.
He was confident that the CBN would be able to address the issues, saying: “Anyway, all those are issues that when the CBN governor has time to address, he will be able to address in full.”
He observed that the apex bank was competing the ministries, departments, and agencies in fiscal terms, arguing: “There must be synergy between the fiscal and the monetary authority. We must be able to deal with the synergy, we must handle the synergy between the monetary authority, the CBN, and the fiscal side.
“Sometimes, it appears that there is competition, especially on the fiscal side. If you look at some of the interventions, you will find that those interventions are interventions that should be managed by ministries.
“The ministry of industry, trade and investment should handle MSMEs interventions, and we should know what the CBN is doing. In other words, if the CBN is intervening in the MSME sector, it should be with the full cooperation and consent of the ministry of industry.
“Sometimes you will get people who are benefiting more than once because we simply have no line of sight on what is going on, on one side.”
However, Tuesday’s statement by his spokesman stated: “Our attention has been drawn to statements and reports in the media mis-characterising as a call for devaluation, the view of Vice President Yemi Osinbajo, SAN that the Naira exchange rate was being kept artificially low.
“Prof. Osinbajo is not calling for the devaluation of the Naira. He has at all times argued against a willy-nilly devaluation of the Naira.
“For context, the Vice President’s point was that currently, the Naira exchange rate benefits only those who are able to obtain the dollar at N410, some of who simply turn round and sell to the parallel market at N570. It is stopping this huge arbitrage of over N160 per dollar that the Vice President was talking about. Such a massive difference discourages doing proper business, when selling the dollar can bring in 40% profit!
“This was why the Vice President called for measures that would increase the supply of foreign exchange in the market rather than simply managing demand, which opens up irresistible opportunities for arbitrage and corruption.
“It is a well-known fact that foreign investors and exporters have been complaining that they could not bring foreign exchange in at N410 and then have to purchase foreign exchange in the parallel market at N570 to meet their various needs on account of unavailability of foreign exchange. Only a more market reflective exchange rate would ameliorate this. With an increase in the supply of dollars, the rates will drop and the value of the Naira will improve.
“The real issue confronting the economy on this matter is how to improve the supply of foreign exchange, but this will not happen if we do not allow mechanisms like the Importers and Exporters window to work. If we allow this market mechanism to work as intended, we will find that the Naira will appreciate against the dollar as we restore confidence in the system.”