Dr. Obadiah Mailafia a former Deputy Governor of Central Bank of Nigeria (CBN), has advised Nigeria’s government to consider measures that will make the naira become an international trading currency.
Mailafia said this in an interview with the News Agency of Nigeria (NAN) in Abuja on Monday.
“In the 70s, Nigerians were spending Naira in London. It was accepted.
“In fact, our Muslim brothers used to go to Mecca and Medina that time and they could spend and buy goods with Naira.
“The situation has changed that even in Benin Republic, they don’t accept Naira.
“We need to restore the purchasing power, the honour and dignity of the Naira as our proud currency and the symbol of National honour,’’ he said.
Mailafia called on the government to start efforts which would increase the Naira’s value so it becomes acceptable internationally in the next decade.
He also said monetary authorities in the country need to be more vigilant because there is a law of finance that says bad money always chases away good money.
“It is like a computer virus, you put one virus, it can wipe off all good data you have and this is what happens with fake currency.
“Once it enters the system, it begins to infect the whole monetary and financial system.’’
In addition, Mailafia advised that the CBN should earn the trust of Nigerians by being transparent the way it operated foreign exchange market.
“The CBN should be transparent on its implementation of monetary policies and the way it supervises commercial banks.
“This will catalyse commercial banks to do what they are expected to do to restore this economy,’’ he said.
He said that restoring the Naira also meant to diversify the economy and diversify the country’s export base.
“When you do that and diversify the sources of revenue and income, it eases pressure on domestic currency so it will continue to be strong.
On foreign exchange policy, the former CBN boss said that some analysts had advised the government to change the new policy in order not to deplete the country’s external reserve.
“The CBN, in the policy, said that in order to ease the difficulties encountered by Nigerians in obtaining funds for foreign exchange transactions, it would henceforth be providing direct additional funding to banks.
“This is to meet the needs of Nigerians for personal and business travel, medical needs and school fees effectively.
“The CBN said such retail transactions will be settled at a rate not exceeding 20 per cent above the interbank market rate.
“We cannot continue to do this forever without depleting the external reserves; if you deplete the external reserves, in fact, the Naira can fall to 1,000 to a dollar.
“We should have a deliberate policy of working toward unification and integration of multiple exchange rates into the law of one price, so that there will be clear transparency in the system.
“It might involve going back to the Dutch option system that we had sometimes ago which did well, by the way,’’ Mailafia said.