CPPE Urges Nigeria to Rethink Complete Naira Floatation – The Centre for Promotion of Private Enterprise (CPPE) has made a compelling case against the complete floatation of Nigeria’s currency, the naira. Citing concerns of potential currency volatility in the face of rising speculative pressures, the CPPE’s argument delves into the pros and cons of this financial strategy.
The Workshop’s Insightful Takeaways
Muda Yusuf, CEO of the CPPE, recently presented a thought-provoking paper at a workshop in Ijebu Ode, Ogun State. The paper, titled “Building a Resilient Economy in an Emerging Administration: The Role of Stakeholders”, highlighted the merits of the recent foreign exchange policy reform, which has been instrumental in unlocking significant capital inflows into Nigeria’s economy. However, Yusuf didn’t shy away from addressing the potential downside, particularly the risk of the naira’s further depreciation.
In his address, Yusuf emphasized the benefits of removing obstacles in the forex market, predicting that such a move would catalyze inflows from various sources like Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI), Export Proceeds, and Diaspora remittances. However, he was quick to caution against a total floatation of the naira, reiterating the risk of unpredictable currency swings amidst increasing speculative pressures.
Towards a Resilient Nigerian Economy
Drawing from his experience as a former director-general of the Lagos Chamber of Commerce and Industry (LCCI), Yusuf stressed the importance of macroeconomic stability. He pinpointed three critical areas for emphasis: moderating inflation, stabilizing the exchange rate, and accelerating economic growth. To achieve these, he advocated for a balanced mix of fiscal and monetary policies, urging that fiscal deficits be maintained within statutory limits.
Yusuf didn’t stop at macroeconomic policies. He highlighted the urgency of fiscal consolidation for economic robustness, emphasizing tax reform as a pivotal tool. Efficient tax administration, curbing tax evasion and avoidance, and eradicating multiple taxation are, according to him, crucial steps in this direction. Moreover, he stressed the importance of maximizing income from revenue-generating agencies by optimizing their operational efficiency.
The Path Forward for Nigeria
The paper made clear recommendations for the Bola Tinubu-led administration. Yusuf called for the establishment of solid economic governance rooted in proven economic principles and real-world evidence. But he also underscored the importance of adapting these principles to Nigeria’s unique socio-economic context. While stressing the need for periodic policy reviews, he cautioned against erratic policy shifts, which could destabilize the economy and erode investor confidence.
One of the paper’s standout points was the emphasis on oil and gas sector reforms as a linchpin for Nigeria’s economic resilience. Yusuf urged the government to display a clear commitment to the Petroleum Industry Act (PIA), emphasizing that this would be pivotal in attracting further investments into the sector.
The event, orchestrated by the Labour Writers Association of Nigeria (LAWAN), was a melting pot of perspectives, drawing stakeholders from diverse sectors like media, labor, and the organized private sector. It underscored the collective commitment to shaping a prosperous future for Nigeria’s economy.