Explains Why Arbitrage Must be Removed in Currency Management
- By Halimah Olamide
Nigeria’s Bola Ahmed Tinubu Sunday morning explained to the world his administration had to remove fuel subsidy in order to reset the economy.
Tinubu, who spoke at the opening of the World Economic Forum holding in Riyahd Saudi Arabia, said his government believe that the Nigerian currency must be allowed to find its value and level in the comity of global currencies.
Tinubu said it may have been painful to take those decisions, he added that in the end, the rewards would outweigh the pains.
“Concerning the question of the subsidy removal, there is no doubt that it was a necessary action for my country not to go bankrupt, to reset the economy and pathway to growth.”
“It is going to be difficult, but the hallmark of leadership is taking difficult decision at the time it ought to be taken decisively. That was necessary for the country,” he said.
Tinubu said, “Yes, there will be blowback, there is expectation that the difficulty in it will be felt by a greater number of the people, but once I believe it is their interest that is the focus of the government, it is easier to manage and explain the difficulties.
“Along the line, there is a parallel arrangement to really cushion the effect of the subsidy removal on the vulnerable population of the country. We share the pain across the board, we cannot but include those who are vulnerable.
“Luckily, we have a very vibrant youthful population interested in discoveries by themselves and they are highly ready for technology, good education committed to growth. We are able to manage that and partition the economic drawback and the fallout of subsidy removal.”
Also speaking on Naira devaluation and exchange rate unification, President Tinubu said that the decision of his government became necessary to allow the Naira to compete favourably with other world currencies.
He said, “The currency management was necessary equally to remove the artificial elements of value in our currency. Let our local currency find its level and compete with the rest of the world currency and remove arbitrage, corruption and opaqueness. That we did at the same time.
“That is a two-engine problem in a very template situation for the government, but we are able to manage that turbulence because we are prepared for inclusivity in governance and rapid communication with the public to really see what is necessary and what you must do.”