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Kingsley Moghalu, a former Deputy Governor of the Central Bank of Nigeria, has expressed skepticism about the expectation that the Nigerian naira will stabilize at N400 to the US dollar. In a series of posts on his X account, Moghalu described this expectation as unrealistic and detached from the economic realities facing the country.
Moghalu criticized the artificial exchange rate maintained during the Emefiele era at the central bank, which he argued catered to the interests of “economic illiterates in political power.” This approach, according to Moghalu, allowed for massive arbitrage by speculators, which ultimately harmed the economy. He emphasized that Nigeria’s lack of a productive export economy is at the core of the issue.
He further pointed out that Nigeria does not have the foreign reserves to support such an exchange rate. “And we do not have $100 billion in foreign reserves. So on what basis would the Naira forex rate return to some fantasy land soon?” Moghalu questioned.
The former deputy governor also highlighted the importance of investor confidence, recalling a time when the exchange rate was between N150 and N165 to the dollar. He stressed the need for Nigeria to focus on building a value-added manufacturing export economy that can earn foreign exchange beyond oil.
Moghalu identified the electricity conundrum as a key obstacle to economic development. With Nigeria generating less than 4,000 megawatts for a population of 200 million, he argued that addressing the power shortage is crucial. “Take power to even 20K megawatts and you will see what the Nigerian entrepreneurial spirit is capable of,” Moghalu stated.
In conclusion, the remarks by Kingsley Moghalu underscore the need for realistic economic policies and a focus on addressing fundamental challenges such as electricity and export diversification. The expectation of the naira stabilizing at N400 to the dollar is, in his view, a fantasy that does not align with the current economic landscape.
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