Africa’s richest businessman, Aliko Dangote has offered the biggest support yet from Nigeria’s private sector for the current exchange controls imposed by the Central Bank in the face of dwindling oil revenues and pressure on the naira which has plunged in value amidst a dollar shortage.
There had been widespread agitation, especially among analysts and leading bankers for the devaluation of the national currency but Dangote says the clamour misses the point, even if the exchange control regime has put Nigeria at odds with investors and bankers.
“I agree that devaluation can be a strong tool for economic management by a nation but so far, no one has given me a good reason to devalue the naira at this point”, he told BusinessDay in Lagos.
“No one has offered in concrete terms, the benefit that can accrue to Nigeria if we were to devalue the naria today.”
Dangote said, “even for a man, he does things in hope, in expectation of a positive reward. If God were to take away the promise of a reward to those who pray, the churches and mosques will suddenly become empty.”
The businessman who is expanding his cement empire across the continent described Nigeria as an import dependent nation and fears of a considerable social upheaval that can follow devaluation led upward spiral in prices.
According to him, “ some of these people pushing for naira devaluation have taken dollar positions and they are hoping to profit from the misery of our people.”
Countries with a good productive base devalue to spur exports he says, adding, “there is nothing that Nigeria can export more of today simply because of a weaker naira.”
Dangote, who is a major rice importer and is now engaged in a backward integration programme, commended the listing of rice as one of the 41 items taken out of the official foreign exchange window, saying price and availability of rice has remained stable since the CBN took that decision.
Dangote insists he has no selfish interest to protect by defending the CBN exchange control regime, saying to the contrary, he has witnessed set backs in at least two of his businesses but he maintains that critics must see beyond their own individual losses.
On Thursday Vice President Yemi Osinbajo said the nation can’t change its foreign-exchange rules to satisfy portfolio investors, giving support to the central bank’s policy.
The government wasn’t “unduly worried” by a decision from JPMorgan Chase & Co. to remove the nation’s bonds from its emerging-market bond indexes, Osinbajo said in an interview.
“We need short-term foreign exchange controls, even at the risk of delisting at JPMorgan,” Osinbajo said. The restrictions “have really been successful.
They’ve led to a situation where our foreign-exchange reserves have stabilised and our current-account deficit has narrowed, which is good in the short term, but it can only be short term.”
Osinbajo’s comments echo those of President Muhammadu Buhari, who said on Sept. 16 that he opposes a further devaluation of the naira.
source: Businessday Nigeria
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