Kingsley Moghalu, a former Deputy Governor of the Central Bank of Nigeria, asserted that the notion of aiming for a Naira-to-Dollar exchanged rate of N400 is unrealistic. Expressing his views on his official platform, Moghalu emphasized the importance of aligning the exchange rate with its true market value. He critisized the policies implemented during Godwin Emefiele’s tenure at the Central Bank, suggesting that they artificially manipulated the exchange rate to appease politically influential but economically uninformed individuals.
Moghalu highlighted the negative impact of this artificiality, including facilitating widespread arbitrage by speculators, which adversely affected the economy. He advocated for a shift towards prioritizing the development of a value-added manufacturing export economy, diversifying Nigeria’s forex earnings beyond oil, and emphasizing the need for tangible and sustainable economic growth.
He wrote;
“Those who want the Naira to be N400 to the $ are living in a dream world. Even discounting for the negative impact of speculative attacks on the value of the Naira, the exchange rate will (and should) reflects its market value in reality, not the artificiality that the Emefiele era central bank sought to maintain to please economic illiterates in political power at the time.”
“That artificiality created room for massive arbitrage by speculators which bled the economy. Nigeria does not (yet) have a productive export economy. That’s the heart of the matter.”
“And we do not have $100 billion in foreign reserves. So on what basis would the Naira forex rate return to some fantasy land soon? It will also take time to regain or achieve full investor confidence such as we had when we were there (and the rate was N150-165 to the $).
“The sooner we focus on a painstaking creation of value-added manufacturing export economy that earns forex beyond oil in real and significant term, the better. Key to this is the electricity conundrum in which we are at less than 4,000 megawatts of generation for a population of 200 million for decades now.”
“Take power to even 20k megawatts (let’s not talk of 50k for South Africa’s 60 million population or Brazil’s 181k megawatts for a population only slightly larger than Nigeria) and you will see what the Nigerian entrepreneurial spirit is capable of.”