Former Minister of Finance and National Planning, Dr. Kalu Idika Kalu, has allayed fears over the floating of the naira.
He explained there is no cause for alarm that floating the local currency would crash it to abyss.
He said the fears were inefficiency in production, savings, investment and paving a way for two exchange rates to coexist.
According to him: “So, all they fears about floatation leading to total degradation of the naira is not there if you float it.
“It is inefficiency in production, allocation, saving, investment, and allowing the two sides of exchange to function, that is the problem, not the act of floating it.”
He spoke as a guest speaker during the “Meet and talk,” organised by Brain Trust Nigeria in Abuja.
President Bola Tinubu recently directed the Central Bank of Nigeria (CBN) to float the naira to eliminate multiple exchange rates.
The group asked Kalu, a renowned economist, who was also the Minister of Transportation, to share his views on the propriety of subsidy removal on May 29, 2023 and the floating of the naira.
According to him, leaving the forces of demand and supply to determine the value of the local currency was a decision in the right direction.
Kalu noted that the revaluation of the naira does not necessarily mean it will remain at the same rate forever.
He stressed that without demand for dollars, the rate will reduce.
He lamented that the CBN determined the value of naira for a long time to create several exchange rates, which the black marketers took advantage of.
The former Minister said: “For them, once you devalue, you will never revalue. It is always going the other way round.
“How can anybody say so. In good harvest the prices will drop. If the suppliers of foreign exchange have just put it at that price, who is going to be buying it?
“Whoever is buying it is doing so because he can make profit. If there is nobody buying it what is going to sustain it there?
“So, the issue of saying I mustn’t devalue just keep going, which is what the fears are ‘they are going to float it. Oh the naira is going to go to N1,000/$’.
” If we continue with these silly policies that we are doing: the arbitrariness of their allocations, so many windows, and so on and so forth, selling through the bank door from the banking hall to the Bureau De Change and the Mallams.
” I say leave the poor Mallams alone. The price is being dictated from Central Bank, it is not the Mallams who can on their own just sell it at any price and somebody has to buy it.”
On the propriety of the removal of the Premium Motor Spirit (PMS) petrol as at the time, President Tinubu insisted it “is gone,” Kalu said there was no way one could have exhaustively addressed the issues before stopping subsidy.
He said, “You can never come up with the finite things you have to do before the removal.”
He described subsidy as a positive measure from any government, noting the management was however abused for several years.
Kalu recalled since 2014, he had detected that sustaining the wrong use of petrol subsidy was paving ways for corruption.