January 25, 2016 – Governor of Lagos State, Mr. Akinwunmi Ambode has said that for a virile economy, the Naira exchange rate must be allowed to respond to other macroeconomic changes in the economy.
He stated this at the weekend while delivering his keynote address at the Nigerian Economic Outlook 2016 organised by the Net-Works Business Club, an exclusive Christian Business Club promoted by Redeem Christian Church of God (City of David Parish) with the aim of providing a platform to empower people towards the realization of their business potentials.
The governor, who was represented as the Special Guest at the forum by the Commissioner for Economic Planning & Budget, Mr. Akinyemi Ashade, expressed confidence in the regime of President Buhari to combat the fiscal failures of the past administration, which, he said, was responsible for the economy downturn we are experiencing following the crash in the price of crude oil – our major source of revenue.
He, however, noted that the current policies must be time bound and give way for a more sustainable exchange rate policy that will bring confidence back to the system, stressing that any attempt to manage the exchange rates will create further distortions in the system which is akin to solving one problem while creating others in the process.
Ambode urged the Central Bank to listen to the various calls by well meaning Nigerians by clarifying its long term strategy for market determined exchange rate policy which he said are genuine and should be addressed as soon as possible.
The governor insisted that, contrary to general belief, the current currency crisis is not a Nigerian phenomenon as all developing countries whose growth in the last decade was hinged on commodity boom are going through same problem which include exchange rate depreciation; rising unemployment and shrinking GDP.
He, however, express his cautious optimism that oil prices will rebound in the medium term as it is not in the interest of most countries for oil prices to fall indefinitely, noting that with rapid decline in exchange rates, some countries that are oil importers are now realizing that falling oil prices have not paid off as expected.
While commending the Federal Government for towing the line of Lagos State in making efforts to increase its Internally Generated Revenue, Ambode emphasised that the most important lesson that must be learnt from the fall in oil prices is the need to diversify the economy by looking inward.
He averred that the solid minerals sector is acknowledged as a viable alternative to oil and gas for foreign exchange earnings, adding that the National Bureau of Statistics has made it clear that the contribution of Solid Minerals to the IGR which stood at 1% in 2014 has the potential of increasing to 10% by 2020.
