By Olaolu Oladipo, Lagos
A former Secretary to the Government of the Federation, Chief Olu Falae has called on the Central Bank of Nigeria (CBN) to give special attention to the manufacturing and agriculture sectors in the allocation of foreign exchange, saying this is needed to drive the nation’s economy.
Speaking with newsmen in Akure, the Ondo State capital on Wednesday, Falae said the measure became necessary to revive the two sectors which were essential for the development of the economy.
“To grow the economy, the CBN should meet the needs of the two sectors to accelerate production in the country. It is when the CBN cannot meet the needs of the manufacturers that they will go to Bureau the Change to look for foreign exchange desperately.
“The tendency is that the FOREX dealers will increase their exchange rate because they know that the manufacturers are desperate to import. This is `desperation exchange rate’ and this leads to cost push inflation,” he said.
According to him, the CBN and other financial authorities in the country should come up with appropriate policy to re-position the economy.
He called for continuity in the economic policies in the country, saying that some 25 years ago, sound economic policies were made for the country to promote production and reduce importation.
“It is a matter of regret that such policies have been jettisoned by successive administration in the country, ” he said.
Falae advised the Federal Government to be less dependent on imports, “we are still importing everything”.
“This is because of availability of oil dollars. Everything in Nigeria is done in dollar content and this is not good for the economy. It is sad that Nigerians have high taste for imported goods, this is responsible for defacto devaluation of the naira.
“The naira is devaluing itself due to hyper inflation creeping to galloping or runaway inflation. The only solution is the better management of our foreign exchange earnings. It is wrong for the CBN to mop up liquidity in the circulation when salaries are not being paid, when there is few money in circulation.
“It is when there is too much money chasing few goods that the CBN is supposed to mop up liquidity.”
He said that the inflation in the country was caused by the exchange rate ”this is called cost push inflation”.
Falae called for better management of the foreign exchange earnings in the country to enhancing economic development.
Falae wants more foreign exchange to manufacturing, agric sectors
By Olaolu Oladipo, Lagos