Peterside faults NERGP, asks CBN to dismantle multiple exchange rates policy

A renowned banker, founder Stanbic IBTC Bank PLC, chairman and founder of ANAP Business Jets Limited, Mr. Atedo Peterside has faulted the Federal Government’s Nigerian Economic Recovery and Growth Plan (NERGP), describing it as a timid plan.
In his keynote address titled ‘Evolving Economy, Good Governance and Repositioning’ at the quarterly dinner of the Kings’ College Old Boys’ Association Abuja Branch, in Abuja during the weekend, he said the NERGP was more akin to a timid plan that may just about leave the country with a negative Gross Domestic Product (GDP) per capita growth throughout the plan period, unless something gives.
Peterside also criticized the Central Bank of Nigeria (CBN) multiple exchange rate, bank quota and all sorts of special forex windows, saying, it was mind boggling and difficult to understand why Nigeria would be embracing a system that had been rejected globally as a bad idea that was only embraced by morally bankrupt persons.
He said, “In terms of a response to the economic crisis, I cautioned that what was needed was a bold, holistic and audacious effort to harmonise fiscal, monetary, exchange rate, trade and macroprudential policies in a seamless and concerted manner.
“The Federal Government of Nigeria (FGN) has since launched its Nigeria Economic Recovery & Growth Plan (NERGP) with great fanfare. It is good that we now have a Plan because even a timid plan is better than no plan at all.
“Yes, in my opinion, the NERGP that we were given was not a bold, holistic and audacious Plan. Indeed, it is more akin to a timid plan that may just about leave us with negative GDP per capita growth throughout the plan period unless something gives. Perhaps the plan was timid because the political economy was not right or dare i say the political will was not there to pursue some of the major and necessary reforms. Politics often gets in the way of economics and vice versa and so none of this is new.
“The Central Bank of Nigeria (CBN) appears to have heeded my January 2017 public warning on the futility of starving almost all sectors of the economy (90% of GDP) of badly needed forex because they wanted manufacturers (accounting for just 10% of GDP) to receive 60% of the available forex. CBN also woke up and finally saw the need to make little sums of forex available through the banks (at N3 75/$ l , later reduced to N360/$ l) to the hundreds of thousands of individuals who had been needlessly starved before. Driving all these people to the parallel market in droves to access forex for personal travel, business travel, school fees, medical bills etc was cruel and pointless.
“Having met their little needs through CBN, most of them have since exited the parallel market thereby causing the Naira to rapidly appreciate there from N520/$1 to N380/$l at present. In a nutshell there has been significant progress here since January 2017.
“Sadly, CBN appears to have since embraced multiple exchange rates, bank quotas and all sorts of special forex windows as part of deliberate policy. It is mind boggling and very difficult to understand why Nigeria, in 2017, would be embracing multiple exchange rates which have been rejected globally as a bad idea that was only ever embraced by intellectually and/or morally bankrupt persons.
“There is no known economic theory on earth that favours multiple exchange rates as a viable medium and/or long-term economic policy prescription. The instrument that is globally accepted for discriminating between types of users is trade policy, which can administer tariffs, levies and special taxes. My hope and prayer therefore is that CBN recognises that it needs to speedily work towards dismantling this embarrassing concoction of multiple exchange rates, bank quotas and special windows in record time. The clock is therefore still ticking on all this.”
Source: WorldStage