CENTRAL bankers may talk in martial terms of defending currencies against bloodthirsty speculators, but they seldom suffer wounds more grievous than a bruising of their egos. They can, however, cause untold harm to economies, as the Central Bank of Nigeria (CBN) is doing in puffing up its exchange rate.
The naira has been hit hard by a fall in the price of oil, Nigeria’s main export. The official exchange rate has slumped by almost 20% over the past year to about 196 naira per dollar. The black market rate, a more accurate gauge, is close to 230. Instead of allowing the naira to devalue, the central bank is trying to defend it by blocking imports. It has drawn up a list of disfavoured goods, and will not grant foreign exchange to import them.

Godwin Emefiele, the governor of the central bank, said he wants to conserve foreign reserves (which have fallen by about a fifth over the past year and now cover only six months of imports) and stimulate local production. “Nigeria cannot attain its true [potential] by simply importing everything,” he said.
The hit list appears to have been drawn up by someone wandering around a home and a building site and randomly pointing at items. It includes Indian incense, toothpicks and wire rods as well as more obvious luxuries such as private jets (demand for which could be slashed by simply barring government officials from flying in them). It also includes basics such as rice and tinned fish. Nigeria does not produce enough of these things to feed itself, but no matter. The nation must be shielded from foreign sardines.
Economists find the policy baffling. Central banks usually prop up their currencies if they are worried about inflation, or allow them to devalue to depress imports and stimulate exports. Nigeria, by contrast, appears to be set on achieving both an uncompetitive exchange rate and higher inflation. Whereas many investors were impressed by the previous CBN governor, Lamido Sanusi, who was sacked for exposing corruption, they fret about the harm being inflicted by the current one. Some wonder which would be worse for Nigeria: allowing him to serve the remaining four years of his term or undermining the independence of the central bank by sacking him.

Obijulius:
Senseless write-ups.

Who reads the economist these days. CIA funded terrorists who will never report on the crimes been committed in the Congo because of their interests.

Very soon we place a ban on importation of labour into this country. You guys better get ready to lament till thy kingdom come.

Obijulius:
Senseless write-ups.

Who reads the economist these days. CIA funded terrorists who will never report on the crimes been committed in the Congo because of their interests.

Very soon we place a ban on importation of labour into this country. You guys better get ready to lament till thy kingdom come.

Starships4u:
Pull him down and plant a hausa/fulani/daura man there... Shebi Na wetn una want

Starships4u:
Pull him down and plant a hausa/fulani/daura man there... Shebi Na wetn una want

PvtParts2:
This topic has been thoroughly trashed here and the position of the author of the article declared as pure sleaze to undermine the methods of shoring the Naira.

omowolewa:
What is inept about him?
You can't just sack a CBN govr like that, its an independent body ask GEJ.
More so, he is only there as the head, most of the decisions reflect the idea of many. The board could be reshuffled at any time but not the Govr.

4Play:
That Godwin Emefiele is the most inept CBN Governor I have ever seen. To go from Sanusi to this numpty is a tragedy.

The problem is amplified by Nigerians' obsession with maintaining a strong Naira which he is trying to serve by these ad hoc idiotic measures. The sooner he is sacked, the better. That GEJ appointed this buffoon in the first place speaks volumes.

wesley80:

May I have a link to the discussion please?

LeOstrich:
I know the people behind this article are the same dudes in BlackStone who recently appointed Sanusi as their regional representative in Africa.

The aim of this useless write up is to ridicule the CBN's effort at curtailing imports which account for much of the forex demand.

No where in the article did the writer post an alternative rather the author mocked the banning of non essential items and went on to declare that we as a nation are not capable of feeding ourselves and so the need to maintain rice and sardine imports plus the very neccessary toothpicks.

This write up should serve as an opener to those of discerning minds of how the west wants to treat us as a dumping ground for their products.

The OP of course is another illiterate Taju posting out of Osogbo who neither understands what he just posted but is merely doing the job he was paid to circulate smear campaign.

As long as we have people like OP and his legion of daft APC Buharist zombies then know that this country can never ever rise above its many problems.

Southwest:
Another senseless article by the usual propaganda suspects...mtchewww

PvtParts2:
Rome did not fall as a result of an external enemy knocking at its gates. No! Rome fell because the Plebs where rioting every other day because of the price of bread.

Rome had become so dependent on wheat exports from Egypt which will later be subsidized by the state .

Politicians campaigned by providing free wheat to the masses and organizing gladiator games. See Aregberascal and his daft Osun voters for parallels.


Progressive is another word for welfarism.

wesley80:
And your point is?

PvtParts2:


A welfare state where govt is paternalistic to its citizens in a misplaced way and it's citizens only view governance in the free largese they get can not survive.

Just as we see you in the north and southwest crying every single day for one form of govt subsidy or assistance.

dustmalik:


^^ These kind of people are the problem of Nigeria. What does It matter if a Cameroonian is appointed and does a better job than Godwin Emefiele, who has failed woefully. Tomorrow, these same people will be the first to criticize Buhari when things keep getting worse, meanwhile their tribal man has done nothing but a terrible job.

patrick89:
during GEJ all the blames went to him and not sanusi, but now Emefiele will bear the burnt of ineptitude of Buhari that has refused to appoint his ministers. how about comparing sanusi's achievements with that of Emefiele's before they became governors? or how about assay their contribution in economics.. so because sanusi was a politician who was giving lectures on politics,religion and tribe instead of economics. Who wrote the "Yoruba is the problem of Nigeria"? go and Google it.

wesley80:
While it may be beyond common sense to expect a neo liberal mouthpiece as The Economist to speak in favor of market regulation and exchange rate controls, the CBN under Emefiele doesn't seem to be exuding much confidence. Resorting to bans and import restrictions was always going to be the lay mans solution - even Buhari knew that in the 80's! . With the long list of bans and restrictions in a country with borders as porous as they could possibly be and unchecked round - tripping, the black market rate is sure to emerge the lead rate and would inevitably pull down the Naira thereby making nonsense of what is turning out to be a chest thumping attempt to hold the Naira steady. A terrible mix of policies in my opinion. Perhaps there should be a law reserving the CBN governors post exclusively for Economists.

wesley80:

Still waiting for your point.

Change2015:


I think you miss the point the cbn governor is making... He has no power to ban any goods. All he is saying is that such importers should source their foreign currency elsewhere. Soludo was an economist who still left a dogs mess behind for mallam Sanusi to clean up. Makes you wonder...
However I still believe Emefiele must leave that position for a more credible person soon.

#change