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A Professor of Economics in University of Ibadan, Professor Lanre Olaniyan has shared his random thoughts on why dollar is now ₦700 and can be more than ₦1000 by December.
This was contained in an article shared on his social media handles, which reads in parts;
‘My Random thoughts on why dollar is now ₦700 and can be more than ₦1000 by December’
The reasons for fall in naira is due to many more fundamental issues including:
1. Using more than 1/3 of foreign exchange earnings to import fuel, petrol, diesel etc.
2. High dependence on foreign products meaning that we are always demanding for foreign currency to fund our inordinate and irresponsible consumption of foreign products.
3. High inflation rate which devalues the naira.
4. Speculative activities of those buying the dollar either as a store since naira has lost this characteristic.
5.The arbitrage incentive offered by the difference between official and parallel market rates is too inviting to be ignored by investors.
6. Government resorting to indiscriminate printing of currency by CBN for government spending, in a way that is not backed up by any production.
Solutions
Reduce dollar demand by;
1. Produce petroleum products locally and available dollar in the country would be increased substantially. Big elephant in the room is how to eliminate using one third of foreign exchange earnings to finance fuel import.
2. Nigerians should reduce their taste for foreign products thereby reducing import demand for non essential products.
3. Reduce inflation such that naira remain the main characteristics of being used as store of value.
4. Find a way to reduce inflation rate in the country through adequate policies that increases production as a large component of inflation in the country is supply constraints related.
5. CBN should reduce printing of money. This may call for political strength and will of CBN and government.
Olanrewaju Olaniyan is a Professor in the Department of Economics, University of Ibadan. He has over 25 years of research, consulting and tertiary teaching experience in Health and Population Economics, Economics of education, poverty and welfare analysis as well as social protection. He also has experience in social policy work in developing countries through which he had been able to interact and work with senior-level technocrats and officials. During 2003-4 he led a team organised by the National Planning Commission of Nigeria to prepare the Social Protection Policy for Nigeria. He was engaged as a World Bank consultant in 2006 -2007 to assist the National Poverty Eradication Programme (NAPEP) in Nigeria to develop her Participatory Poverty Monitoring and Evaluation framework. He was also a member of the national technical team that prepared the National Health Accounts for Nigeria in 2009. He is currently the Director, Health Policy Training and Research Programme (HPTRP), Department of Economics, University of Ibadan as well as the Coordinator of the University of Ibadan Master’s in Development Practice (MDP) programme. He has consulted widely for, and/or received research grants from many organizations/agencies among which are: the World Bank, World Health Organization, UNESCO, International Development Research Centre (IDRC), Ottawa, Canada; African Economic Research Consortium, Partnership for Transforming Health Systems (PATHS), National Planning Commission, Nigeria and Federal Ministry of Finance, Nigeria and National Poverty Eradication Programme (NAPEP) in Nigeria. He is currently a member of the Vaccine Implementation Advisory Committee of the National Academy of Science for Nigeria. Olanrewaju was educated at the University of Ibadan, Nigeria where he obtained Bachelor of Education (B.Ed.) (First Class Honours) Educational Management and Economics; and Ph.D. Economics.
