BISMARCK REWANE: NIGERIA NEEDS TO START TO BORROW

But I don’t think that fiscals have to come down. As a matter of fact, at this point in time is when you have to increase your fiscal spending on infrastructure because that is what is going to drive and alter the economic destiny of this country.

We have an infrastructure gap in every respect, both institutional and physical. Now, you need to spend on bridges, roads and everything. And you will need a marshal plan in the North-East after the elections.

Even if we don’t have the revenue, we need to start to borrow and borrow judiciously because as a borrower, Nigeria is more disciplined than as a non-borrowing country. Nigeria has always done better when oil prices were low.

In our estimation, anything between five to eight per cent depreciation can bring some kind of semi-equilibrium to the market. And it will allow you to bring interest rates down.

If we had adjusted in March, we shouldn’t have been at 160 (naira to dollar), we should have been at about 135. What the central bank and Nigeria needs now is doing the right thing and doing it at the right time. 

I think the central bank at the MPC meeting on November 24 and 25 is going to have to take a very hard look and make some adjustment. I don’t think we have the luxury of holding it till after the elections.

Dollar strengthening is not the same thing as naira weakening. There is nothing peculiar about the Nigerian naira. Almost every currency in the world has adjusted downward. For example, earlier on this year, it was $1.45 to the euro. Today, it is about $1.19.

The reality is that we are surrounded by five French-speaking countries. The entire informal trade is tied to the CFA Franc, which is tied to the euro. By that currency becoming cheaper, your FMCG goods here cannot be sold efficiently in those countries.

So, you don’t do yourself any good by over-valuing your currency, especially if you have the opportunity to explain that it is global phenomenon. So, you have to reposition your currency and make yourself competitive, both internationally and domestically, and that is a key thing.