No, ‘Uncle Sam’ – The Nation

• America should stop pestering us to devalue Naira

Despite its firm resolve not to devalue the national currency – the naira, the United States government, it would appear, cannot wait to see the Buhari administration go that route. Moments before President Muhammadu Buhari jetted out to the country last week, US Assistant Secretary of State for Africa, Linda Thomas-Greenfield, spoke of the US government’s desire to bring up the matter for discussion. According to her: “Our recommendation is, and we will have discussions about it … is that they should look at the exchange rate and try to make the exchange rate more realistic to what the value of the naira is to the dollar”.

Are we surprised that the US government would seek to arm-twist the government on an issue that the Nigerian government would ordinarily consider as settled? Only when one forgets that the United States-based lender, JP Morgan, had in September last year expelled Nigeria from its Emerging Market Government Bond Index (GBI-EM) citing “alleged lack of liquidity and transparency in the nation’s foreign exchange market”. The measure came after it could not get the Central Bank of Nigeria (CBN) to lift foreign exchange trading restrictions imposed in the wake of the relentless surge in demand for forex.

The same sentiments were echoed by the International Monetary Fund (IMF) after it emerged from its 2016 Article IV Mission to the country in February. “The foreign exchange restrictions introduced by the CBN to protect reserves have impacted significantly on segments of the private sector that depend on adequate supply of foreign currencies”. It then recommended “as part of a credible package of policies…the exchange rate should be allowed to reflect market forces more and restrictions on access to foreign exchange removed, while improving the functioning of the interbank foreign exchange market”.

As in cases of this nature, the US is hardly an uninterested party.

And what is the position of the Federal Government? Perhaps more than any other subject, the Buhari administration has set out its arguments most forthrightly – shorn of ambiguity: First, that a country whose dominant export is oil, one with limited export potentials, has very little to gain from devaluing her currency. In other words, devaluation, given the current virtual absence of an export base will boost nothing; rather it will only lead to a general rise in prices of goods – a case of double jeopardy. Second, that in the face of continuing slowdown in the rate of accretion into the nation’s foreign reserves, the forex restrictions had become necessary to halt the inexorable march into a balance of payment crisis. Flowing from this is the need to ensure that the limited forex are allocated to sectors considered as priority by the Federal Government.

It is not exactly that we expected that the Buhari administration’s argument would sway the US government, the IMF or even the hordes of portfolio investors who have neither the stake in the economy nor the stomach to appreciate the resolve of the Federal Government and the imperative of the controls put in place to stem the negative flow of capital.

However, for good or for ill, the Federal Government has made its choice. To the extent that Nigerians who daily live with the consequences have had the opportunities to debate the pros and cons in an open and unfettered atmosphere, the least we expect from a government that considers itself friendly is to understand and accept the choice by the duly elected administration. In the circumstance, we find the resort to subtle blackmail not only scandalous but unacceptable.

So, rather than baulk, the Federal Government should rebuff the pressure; indeed, it should stick to what it considers the nation’s primary interest, which is that both devaluation and removal of the foreign exchange trading restrictions at this time can only bode ill for the economy.