Following President Muhammadu Buhari’s repeated refusal to devalue the naira despite the yawning gap between the so-called official rate and parallel market rate of the nation’s currency to the US dollar, coupled with the absence of foreign reserves to defend the naira, Ekiti State Governor, Mr. Ayodele Fayose, has declared that the administration’s dogmatic foreign exchange policy is killing Nigerians.
He also described the president’s unwillingness to embrace the naira devaluation as an attempt to shortchange Nigerians.
Fayose said: “With the gap between the official rate of N199 and open market rate of over N400 to one dollar, the naira has already been devalued.
“Therefore President Buhari must stop deceiving himself and shortchanging Nigerians, especially the states and local councils in the country with his forex policy.”
Going down memory lane, Fayose averred that there was no time in the history of Nigeria that the gap between the official rate of the dollar and secondary market rate exceeded N200.
Fayose pointed out that it made no economic sense for the federal government to keep computing the country’s revenue on the basis of the Central Bank of Nigeria’s (CBN) official rate of N199 to a dollar while states and local councils that share the revenue with the federal government run their businesses at the parallel market rate of over N400 to the dollar, thereby causing enormous distortions as businesses fold up by the day and the prices of goods and services skyrocket.
The media aide to the governor, Mr. Lere Olayinka, in a statement issued in Ado-Ekiti yesterday, said aside from breeding corruption through round tripping or foreign exchange arbitrage, Nigerians were also being duped, while middle class Nigerians who grow the country’s economy are being decimated.
The governor said Buhari was applying his 1984 failed economic policy during which the prices of goods were fixed, not minding the cost of supply, such that essential commodities like milk and sugar became scarce and Nigerians were made to line up in the sun to buy rationed commodities.
He advised the president to pay more attention to the ailing economy of the country instead of junketing around the world, wasting $1 million per foreign trip, saying: “President Buhari has travelled to 24 countries in eight months, and will be spending 16 out of the 29 days in February outside the country, with over $500,000 being spent on estacode while the presidential aircraft, which includes fuelling of the plane and allowances for the crew is said to be in the range of $500,000.
“The president’s entourage obviously collects its travel allowances in dollars at the official rate of N199 and comes back to Nigeria to change it at the open market rate of N400.
“That must be the reason they encourage the president to keep junketing abroad when life is becoming unbearable for Nigerians.”
The governor added: “The situation is such that Nigeria gets say $2 billion revenue in a month, calculates the $2 billion revenue on the basis of the official CBN rate of N199 and shares the revenue among the three tiers of government.
“In elementary economics, the implication is that when revenue is calculated based on N199 to the dollar and the federal government will be declaring revenue of say N400 billion to be shared by the three tiers of government, however, the value of revenue that should have been shared is over N800 billion at the open market rate of N400 to one dollar.
“Meanwhile, the three tiers of government pay salaries to workers on the basis of N199 per dollar while the same workers pay for goods and services that are priced at the open market rate of N400 to one dollar.”
Fayose’s admonition came just as the presidency confirmed that Buhari would begin a week-long official visit to Saudi Arabia and Qatar starting from monday.
A statement by his spokesman, Mr. Femi Adesina, said Buhari would be accompanied on the trip by a high-powered federal government delegation, including the Minister of State for Petroleum Resources and Group Managing Director of the Nigerian National Petroleum Corporation, (NNPC), Dr. Ibe Kachikwu.
According to him, the president would first fly to Riyadyh for talks tomorrow with King Salman Bin Abdulaziz Al Saud and senior officials of the Kingdom of Saudi Arabia.
The statement said: “Ongoing efforts by Nigeria and other members of the Organisation of Petroleum Exporting Countries (OPEC) to achieve greater stability in the price of crude oil exports are expected to be high on the agenda of discussions between Buhari and the Saudi monarch.
“Crude oil prices and market stability will also be on the front burner, when Buhari goes on to Doha on Saturday for talks on Sunday with the Emir of Qatar, Sheikh Tamim bin Hamad Al Thani.”
Adesina said the president was also scheduled to meet with leading Saudi and Qatari businessmen in Riyadh and Doha, and invite them to support his administration’s efforts to revamp the Nigerian economy by taking advantage of the great investment opportunities currently available in Nigeria’s mining, agriculture, power supply, infrastructure, transportation, communications and other sectors.
According to him, Buhari’s other engagements in Saudi Arabia included meetings with the heads of international financial organisations and multilateral associations.
“Before going on to Doha, the president will also visit Medina and Mecca to pray for greater peace, prosperity and progress in Nigeria,” the statement added.
Ahead of Buhari’s latest trip to the two Middle Eastern countries, the federal government said yesterday that it would back Saudi Arabia and Russia in freezing oil output while giving Iran and Iraq a way out to regain some of their lost market share due to sanctions and war.
According to Bloomberg, Kachikwu told reporters in Doha, the Qatari capital, sunday that Nigeria’s oil production would be maintained at 2.2 million barrels a day this month, unchanged from January.
“Countries like Iran and Iraq have been out of the market for a while and if they are to come back you shouldn’t freeze them out where they are, you should freeze them at a higher level,” Kachikwu said. “By June we will come very close to tightening the market.”
Saudi Arabia, Russia, Venezuela and Qatar agreed last week to keep production at January levels, as long as others follow suit, in an effort to revive prices from a 12-year low.
Iran’s production has slumped since international sanctions were imposed on its exports, and Iraq is seeking to rebuild following years of war and under-investment.
Kachikwu spoke with reporters after meeting with Qatar’s Energy Minister Mohammed Al Sada and Qatar Petroleum Chief Executive Officer Saad Sharida Al Kaabi in Doha.
He’s scheduled to meet with Saudi Arabian Oil Minister Ali al-Naimi today, said a person familiar with his itinerary.
“Nigeria will continue to look at the possibility of increasing production, not to sell it, because we have local consumption that is essential for us,” Kachikwu said. “Right now we are not even exporting the quantity that OPEC has given us.” Demand from domestic refineries is at least 500,000 barrels of oil a day, he said.
There is little chance that OPEC will hold an emergency meeting before the next regular one scheduled for June, Kachikwu said. “Rather than focus on an emergency meeting, we need to talk more.
“Because if you held a meeting when you haven’t agreed largely on the solution it wouldn’t be productive and would also affect the price of oil,” he said.