While speaking with BBC Africa on Business Report about naira devaluation, Alhaji Sanusi Muhammad II, the Emir of Kano and immediate former governor of the Central Bank of Nigeria (CBN), said that the argument about Naira devaluation is misunderstood because already, Naira has been devalued.
In addition, he explained that President Muhammadu Buhari and the CBN were only subsidising the private sector by selling dollars to them at N200 as opposed to the actual market price. According to the former Governor,
This argument (on devaluation) I think has first of all been framed wrong, it’s not an argument about do we devalue or do we not devalue. The naira has already been devalued.
What is the value of the naira? It’s what you can get for it, what you can get for the dollar in a free market between a willing buyer and a willing seller – and it is not 197.
All that is happening is that the government has chosen to sell its own dollars at a subsidised rate to the private sector. That’s what is happening. So, if you’re lucky, you’d get something worth N300 for N200 and you save N100.
He postulated that the CBN was losing N100 on every dollar sold to the private sector, giving room for huge arbitrage.
For every $1 billion that the central bank sells, it has trans-loaded N100 billion to the private sector – that’s what is happening. So you got a huge arbitrage opportunity, which either way undermines the government’s anti-corruption stance.
You also take so much money away from states and local governments, because this is money that from oil proceeds, from PPT, royalties, that should go to education and healthcare for the poor.
While the President is looking at the pain inflicted on the poor, by high prices of import, he also needs to look at the pain inflicted on them by taking away revenue that could go into education and healthcare.
Alhaji Sanusi, who commended President Buhari for the transparency in his administration, removal of subsidy and other structural reforms, also advised that there is need for the federal government to have clarity of thinking in the dealing with the foreign exchange policy. Hear him:
There has to be clarity of thinking. The government on the one hand says it wants to encourage domestic production, the governor of the central bank says he wants to reduce import dependence, but one would think that the way to reduce import dependence is not to make imports cheaper.
You subsidize exchange rate – you’re making imports cheap. So you’re actually pursuing a monetary policy that undermines structural objectives.
Being a first-hand witness of the corruption committed by the past government, the King insists that the people involved should be made to face justice.
He also pointed out that president Buhari will not be in power forever, hence the need for the country to stretch beyond recovering stolen funds to building institutional systems. In his own words,
The thinking that has to be done is beyond looking for these people, beyond recovering the money, beyond prosecuting them.
What kind of institutional changes do we need to have in processes, in systems, that would make it impossible for the next president to do the kinds of things done in the past.”
Talking about the problem of Boko Haram in Nigeria, he rightly noted that insurgency does not end overnight and called for strengthened intelligence, coordination and community awareness. Sanusi revealed,
We have taught people in Kano to be able to defend themselves, if the need arises.
Sanusi’s comments about Naira devaluation was made just a few weeks after the Nigerian president said he will not “kill the naira” by accepting suggestions to devalue it.