The Presidency has opened up on why President Bola Ahmed Tinubu decided to float the naira.
It stated that the decision was taken because the Central Bank of Nigeria (CBN) was spending about $1.5 billion monthly to support the naira at the official rate.
The Special Adviser to the President on Information and Strategy, Bayo Onanuga, made this known during a recent interview on Arise News.
Onanuga claimed that some people close to the former CBN governor, Godwin Emefiele, and those close to some people in Muhammadu Buhari’s government, collected money at the official rate and sold it in the unofficial market.
He said, “Under the last administration (of the CBN), according to reports in the media, the CBN was spending about $1.5 billion every month to support the naira at the official rate, which was about N450 to a dollar or so, whereas, in the parallel market, it was going for almost double that.
“So you find a situation where some people who are close to the former governor, who were close to some people in government, were collecting money at the official rate and then doing what people call an economic crime, arbitrage, selling this money, roundtripping, selling it in the unofficial market and then making a lot of money for doing nothing. These are some of the things that the government tried to stop.”
Onanuga also said that at some point, due to the gap in the official window and the parallel market, the FDI had ‘dried up’ as people were not interested in investing in a place without stability in the exchange rate.
The presidential aide said with the floating of the naira, the gap had reduced significantly, and investments were getting secured again.
Speaking on the rising rate of inflation and the economic challenges in the country, Onanuga said that what is being experienced in Nigeria is “hyper-inflation”.
The presidential aide said that the prices of goods and commodities in the market were increasing more rapidly than they should.
He said, “Some of those price increase we are witnessing are very very artificial, everybody is just increasing prices. Because if you align it with the exchange rate, even if you want to dollarize your economy, you cannot really support the kind of very steep price increase we are going through in this country.”
Onanuga then said that more questions and grievances should be directed towards the state governments and local government councils rather than the federal government as the allocation of funds given to the lower tiers of government had been increased, but unfortunately, as of late, there is nothing to show for it.
“If we can sustain the stability we have now if we can ensure that we don’t have the volatility anymore, I’m sure the naira will begin to wax stronger and stronger and probably go to the rate that Governor Cardoso envisages it will be instead of the rate we have now,” he added.
