•Prof Olofin (R) addressing Reporters
A Professor of Economics, Professor Sam Oladapo Olofin has called on the federal government and other major stakeholders in economic society across the country to save naira from imminent collapse.
The former special adviser to the President on Economic Matters, Olofin while speaking at a public lecture Organised by Nigerian Economic Society(NES) with the theme, “Recent Development In The Nigerian Foreign Exchange Market: Issues, Options and Way Forward”, held at University of Ibadan yesterday, stressed that if the Naira must be saved from imminent collapse, the time has come to rescue it from the hands of the powerful operators in the foreign exchange market.
The former President and Fellow of Nigerian Economic Society (NES), Olofin in his lecture said, “the time has come like it is in other countries that believes in rule of law, to define what is legal and distinguished such from what is criminal.
“Have criminals apprehended and made them to face severe consequences for their actions.The weak and vulnerable need to be protected and prevented from imminent collapse.”
“We have examined the evolution and operations of the Nigerian Foreign exchange market in relation to recent policy measures aimed at addressing observed anomalies in the market. As we speak the Naira value against major foreign currencies especially the dollar has continued its free fall and stands at over N1.500 to a dollar.”
“Without sounding too simplistic or offering a silver bullet that would solve the seemingly complex problems in the foreign exchange market, our attention should be focused on this powerful segment of the market, the so-called parallel of black market. We have succeeded either deliberately or unwittingly, in creating a monster that has been well protected.”
“The depreciation of the Naira continues on daily basis and it appears that if appropriate steps are not taken, the Naira may be heading towards crash as the value races towards the 2,000 Naira to a dollar mark and possibly beyond, and the unimaginable consequences this would have on the rate of inflation and the entire economy.
“The immediate issue of concern in the near and immediate future as to the way forward should be on how to put a halt to this free fall, stabilize the value of the Naira and ensure effective operation of the foreign exchange market.
“The new policy measure put in place in June 2023, still regards as it’s center piece the ‘willing buyer and willing seller’ model, in effect assuming a perfect competitive market in which forces of supply and demand would ensure the emergence of market clearing exchange rate. Also that this would stabilize tue market.
“Far from it, the Nigerian Foreign exchange market is never a perfectly competitive market, and no matter how we try this market structure and all its assumptions, which may be relevant in other economies particularly developed economies cannot be super-imposed on Nigerian Foreign exchange market.
“In addition to other things that we value the Naira for like most other currencies it remains one of the important symbols of our sovereignty as an independent country as we pursue our dreams and aspirations as a country immensely blessed by God and with great potentials.” Olofin said.
Earlier in his welcome address, the President of the Nigerian Economic Society, Prof Adeola Adenikinju said “the choice of today’s theme is apt as it is perhaps the most important issue in Nigeria today. From Aso Rock to the CBN headquarter, and NNPC Towers, from marina street in Lagos to Bodija Market in Ibadan, the fish seller in Yenagoa to suya seller in Sokoto to the farmer in Markurdi, the exchange rate is on the lips of everyone. Hence, the choice of the topic for the 2024 NES Public Lecture.
“The subject of foreign exchange is within the ambit of economics. The exchange rate is a price. However, for an import dependent economy like ours, it is a price that influences other prices in the economy – products, money, and factor markets. The spike in inflation in the last few months in particular has been largely driven by the exchange rate. They pass through effect from the exchange rate to other prices is quite high.
“The government, especially the CBN, has reacted to the sharp and persistent devaluation of the naira with a rash of circular and policies. At times, we worry that the effects of a particular policy have not been assessed before others are quickly thrown into the mix. This action has a tendency to add to uncertainty and the flight to safety postures of economic agents, who continue to hold dollars outside the banking system,” he said.
