Former Cross River state governor and presidential candidate of Peoples Redemption Party (PRP), Donald Duke, Tuesday said floating the naira without first developing local industries and strengthening domestic production is further impoverishing Nigerians.
In an interview with reporters in Abuja, Duke argued that Nigeria’s economic difficulties were being worsened by import dependence, weak industrial production, rising fuel costs, excessive government spending and monetary policies that failed to address the underlying causes of inflation.
The former governor questioned the wisdom of allowing the naira’s value to fluctuate without deliberate measures to strengthen the economy and sustain a realistic exchange rate.
‘No country floats its currency. The currency is your economic worth. It is like floating your value. As a human being, what is your worth? Are you going to float your worth? You manage your worth. You manage your currency.
‘You have to sit down and determine what an exchange rate should be. So, if you say a fair exchange rate for us would be 500, 600 naira to a dollar, fine, how do we achieve that?
‘You need foreign currencies to allow you to import your necessities, but you must develop the local industry.
‘Now, when you float the currency, you impoverish your people further because they’re not even developing their local industry and so, everybody’s importing one thing or another.
‘That’s why I said if the naira becomes one naira to two dollars, everybody will clap. But how can you just keep on importing more?,’ he asked.
Duke insisted that countries deliberately pursue policies designed to sustain the value of their currencies, adding that Nigeria should similarly determine the exchange rate it considers appropriate and work towards achieving it.
‘You look at the currency and you look at the value you want to sustain. Everybody does it. The Chinese do it. The Americans do it. They’re not going to allow their currency to fall.
‘Then you look at what it is that we ought to do to achieve the value that we think we ought to be.
‘So, what are the things that we’re importing that we can do without and make sure that they’re done here in Nigeria? That’s the way we ought to be thinking.
‘I mean, doing it in Nigeria, we’ll be creating jobs for our people. And if you’re creating jobs for our people, you’re creating economic stability for your people. As long as you continue importing, you’re creating jobs overseas,’ he said.
The former governor also lamented what he considered insufficient attention to Nigeria’s balance of trade, saying the country could not achieve economic stability without addressing the relationship between its imports, exports and foreign investment.
‘Nobody’s even talking about balance of trade anymore. Balance of trade is: I buy so much from you, you buy so much from me. If I have nothing to give you, then you invest in me.
‘So you balance what goes out to what comes in.’
On trade, he argued that Nigeria needed to pay greater attention to the balance between imports, exports and foreign investment, saying economic stability would remain difficult without a stronger domestic production base.
Duke also faulted the Central Bank of Nigeria’s high interest rate regime, saying the cost of borrowing was discouraging investment and making it difficult for businesses to obtain financing for productive activities.
‘I will also talk about the interest rate regime. I’ve had this conversation with the governor of the Central Bank.
‘They believe that the interest rate is so high because they’re trying to stem inflation.
‘I said, well, there’s a misalignment between monetary and fiscal policy. Monetary policy has interest rates and all that.
‘But interest rates don’t cause inflation. The price of your fuel causes inflation. The high cost of your fuel causes inflation because everything moves through transportation.’
He said the prevailing interest rates meant that many businesses could no longer afford to borrow.
‘But right now, because of your interest rates, no one will borrow money today. They won’t give it because they know you can’t pay for it.’
Duke identified fuel costs as a major driver of inflation, arguing that the price of transportation affected the cost of virtually every product and service in the country.
He also blamed excessive government spending and the widespread patronage of imported products by public institutions for putting additional pressure on the naira.
‘The second thing is the unbridled spending by the governments. If you go to government establishments, literally everything is imported. Vehicles, everything is imported.
‘When you learn to start making those things here, and you patronise yourself, you don’t put pressure on the exchange rates because they’re made locally.
‘And secondly, you’re creating jobs. But more importantly, you’re localising your expenditure, your growth.’
Duke said government spending should be directed towards strengthening domestic production, creating jobs and reducing the demand for foreign exchange.
Duke also questioned the emphasis on age in assessing political leaders, arguing that competence and the quality of appointments were more important considerations.
‘Age doesn’t affect your brain,’ he said.
He maintained that political leaders depended considerably on the quality of the teams they assembled, but complained that appointments were increasingly driven by political considerations rather than the requirements of effective governance.
‘When a government sets up the cabinet, you see the number of politicians that are playing with it. A lot of the appointments are based on politics and not on governance,’ he stated.
Duke also expressed enthusiasm about the personalities in the presidential contest, saying he looked forward to substantive debates in which aspirants would explain their programmes and approaches to the country’s challenges.’I’m actually very excited about the pool of candidates we have. Adewole Adebayo – Social Democratic Party (SDP) and Peter Obi – National Democratic Congress (NDC).