Moghalu calls for trade reforms, warns against making naira stronger

The former Deputy Governor of the Central Bank of Nigeria (CBN), Kingsley Moghalu, has called on President Bola Tinubu to consider trade reforms and warned against a strong naira.

Moghalu, during an interview with Arise TV on Thursday, stated that there shouldn’t be foreign exchange reforms without trade reforms in Nigeria.

He expatiated that the forex reform is one of a series of reforms that should be carried out in the Nigerian economy to avoid Nigerians bearing the brunt of the policies, while businesses profit from the government’s decisions.

The former CBN top director said trade reforms will make Nigeria’s economy competitive and more productive. According to Moghalu, this will attract foreign investments into the country.

“And also, apart from the question of poverty and the well-being of Nigerians. More broadly, these reforms are just the first stage, they are not the end.

“In fact, it is the beginning of a series of reforms that have to take place in the Nigerian economy. The forex reforms must also be accompanied by trade reforms, otherwise, it is just the people absorbing the shocks and the businesses getting the profits.

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“We need to move to trade policies. How do we make Nigeria’s economy competitive, how can we make it productive, how can we then export value-added goods so that we attract foreign exchange,” he explained.

Moghalu also touched on the drive to ensure the naira is stronger than ever. He said there must be a balance, as a stronger naira could make Nigeria import dependent.

He explained that having a stronger currency would make importation cheaper, which could affect competition between local and foreign products.

The former presidential aspirant advised that the government should engage in competitive devaluation like China does to make Nigeria’s economy productive.

“I also need to say that we have this fixation on having a strong naira. Having a strong naira when you are not a productive economy, all it does is that it makes you an import-dependent economy.

“Because having a strong naira makes your import cheaper. Economies that are productive, actually, sometimes engage in competitive devaluation.

“China does this, so that their goods are cheaper for foreigners to buy, and therefore, they get more money into their country, rather than wanting their currency to be very strong,” Moghalu said.

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