Moghalu Explains Why Naira Is Performing Poorly, Reinforces Call For Diversifying The Economy

A former Deputy Governor of the Central Bank of Nigeria (CBN), Kingsley Moghalu, has explained why the country’s currency is performing poorly in the foreign exchange market.

In a post via his official X account on Friday, Moghalu explained that the government of President Bola Tinubu has not been able to diversify Nigeria’s economy from its heavy reliance on natural resources for foreign exchange to an export economy centred on value-added manufacturing and services, which is why the country’s economic policies continue to fail.

Naija News reports that Moghalu further disclosed that an extraordinary political will which focuses on merit and competent technocratic management was needed to fix Nigeria’s economic challenges.

He said, “The problem with the Naira today is not that it was or has been “floated”. In any case, we no longer have the oil revenues (for various reasons) to underpin a managed float with robust foreign reserves.

“The real failure of Nigerian economic policy is that of having failed to diversify its economy away from reliance of natural resources for forex supply towards an export economy based on value-added manufacturing and services. This is the zone of industrial and trade policy.

“The reason for this failure lies in Nigeria’s political culture that fosters a rentier economy. Habits, especially bad ones, are hard to break. But Malaysia, Thailand and Chile, all originally resource based economies, successfully achieved “economic complexity” over time, manufacturing and exporting increasingly sophisticated products. For Nigeria to achieve this will require what its present generation of politicians appear to lack, for you cannot give what you do not have.

“The level of political will required to change course is extraordinary, and requires a focus on merit and competent technocratic management rather than crony- empowerment based on vested self interest. Until these fundamentals are fixed, there is little hope for the Naira. The world has changed from the days of our being awash with oil money. Many other countries that are not in OPEC now produce massive amounts of oil.”