Renowned economist, Dr. Biodun Adedipe has blamed the unified foreign exchange rate introduced by the Central Bank of Nigeria (CBN) for the spike in shrinking businesses and rising poverty in the country.
Adedipe, who delivered the keynote paper at the Business Journal 15th Anniversary Lecture in Lagos, posited that while unified exchange rate was inevitable, it has dire consequences for the economy and living standard of Nigerians, considering the dollarisation of the Nigerian economy.
“The unified exchange rate has made all Nigeria-based businesses shrink (in USD terms), most Nigerians poorer (because of high import dependency – N1.88 trillion or US$2.49 billion monthly average in H1’2023) and economy contract (dollar-denominated GDP smaller). Deliberate efforts must be made by all and sundry to reverse the dollarisation of the Nigerian economy. Our need for US Dollars and other trading currencies will reduce and our Naira will appreciate in value.”
The keynote speaker, who is the Founder/Chief Consultant of B. Adedipe Associates, lamented that Nigeria simply applied the recipe of the International Monetary Fund (IMF) in eliminating premium by devaluation of the domestic currency, which he described as “mere financial (borrowing and non-FDI capital flows) and won’t solve the underlying structural problems. The enduring solution is expansive domestic manufacturing and relentless, deliberate and focused export drive.”
He stated that massive depreciation of the Naira has led to uptick in inflation rate, increase in transport fares, increased cost of living, increased cost of doing business, including massive exchange losses and agitation for wage and pension increase across the country. He called for immediate strategy reset by the Federal Government and CBN according to key priorities of the citizens.
“The economy is desperate for growth and the big number in Nigeria is food inflation, at 30.64% (Y-o-Y) in September 2023 – rising from 24.13% in Dec’2022, 24.45% in March, 25.25% in June and 29.34% in August. Food security should therefore, come big in Nigeria’s economic development agenda – availability and affordability, which are two of the four categories of the EIU Global Food Security Index in which the country ranked poorly in #97 in 2021 and #107 in 2022 out of 113 countries. The other two categories are quality & safety and sustainability & adaptation.”
He said the projected growth in Nigeria would be driven by large, youthful and rapidly growing population (6th largest in the world, median age at 17.2 years); rapid urbanisation (51.96% in 2020 and 53.96% in June 2023, up from 47.84% in 2015); deepening Internet penetration: at 45.57% in Aug 2023, rising from 31.48% in Dec 2018, teledensity: 116.6% in Dec 2022 and 115.63% in Aug 2023, a drop from 123.48% in Dec 2018 (but 91% in March 2019); Global Internet users: Nigeria ranks 11th ;strengthening innovation culture, driven by the survival instinct and sustained deep reforms (President Tinubu is focusing on global competitiveness and Ease of Doing Business, plugging leakages and shrinking the space for economic rent).”
