Not Yet Convinced About Devaluation

President Muhammadu Buhari yesterday reiterated his opposition to the devaluation of the nation’s currency, saying he was yet to be convinced on its merits.

Speaking on his first media chat in Abuja since assumption of office, he stressed the need to provide foreign exchange to productive sectors so as to reflate the economy, insisting that the challenge faced by the Nigerian economy was aggravated by the drop in crude oil prices.

Buhari also disclosed that since the introduction of the treasury single account (TSA), a total of N1.5 trillion of government funds had so far being transferred to the CBN.
When asked if it wasn’t time for the central bank to devalue the naira in view of the pressure in the foreign exchange market in recent times, he said: “I need to be convinced on the naira devaluation. If you devalue the naira, against what? Against the US dollar, against pound sterling, against the yen, against the deutschmark, against the French franc?

“If you seriously look at our state of development and that of other countries, as well as the IMF and World Bank that play around with currency devaluation, you will know that devaluation is for developed countries that can compete with their goods and services.
“This is because devaluation will make it cheap for their currencies and for them to sell more of their goods and services and they keep their people employed and their factories open. But Nigeria imports even toothpicks.
“Don’t forget, we have 41 items that had been banned from getting foreign exchange for importation, from rice to toothpick! Look at the lifestyle of Nigerians.

“If we are exporting textiles, vehicle parts, and others, things would change and other countries would be able to buy our spare parts, our textiles and our goods and services, and when we devalue under such conditions, we can sell more, employ more people and produce more. But we are on the receiving end.”
On a personal basis, he maintained that he does not support devaluation, after which the president digressed to comparing the Nigerian economy 30 years ago and the economy today.
“Why? When we came in 1983 to 1985, we didn’t know how much Nigeria had accumulated as debt in the Second Republic and I was privileged to be part of the General Olusegun Obasanjo government that handed over to the (civilian government) in the Second Republic.

“I know that the administration handed over a relatively stable and secure economy to the Second Republic, with some foreign exchange. Also, there was security in terms of less armed robbery, etc. But by the time the military came back again, nobody knew how much Nigeria owed. The foreign reserves had disappeared.
“But the situation now is aggravated by the downturn in the petroleum industry where crude oil price is about $37 a barrel. And then we have debt service of about N1.4 trillion, we have other commitments on the ground such as contracts, we have to reorganise the NNPC and to make sure that we introduce TSA, so that we would know what goes in and out of the system.
“Before, there were so many accounts. For example, about 45 accounts in NNPC alone. In the military – that is the army, air force, navy and Ministry of Defence – about 70 accounts.

“So with the TSA, every institution has just one account and number. If you have one number, then it is just that number you have and we can trace it. With that means is that we have mopped up about N1.5 trillion into the CBN.
“So these are the measures we are taking, but the insecurity in the country, the downturn in the petroleum industry are very unfortunate developments for this government, but they are realities of the situation which Nigerians have to face.
“And then, look at the previous budgets, over 90 per cent was (allocated to) overhead (expenditure). Which country can develop without capital projects? No infrastructure, no power, no roads. So we are in a very bad shape,” he said.

When prodded further on the hardship businesses were experiencing accessing foreign exchange, Buhari pointed out that there was a need to locate productive firms and industries, find out what the essential raw materials they need, spare parts as well as the machinery they need for production, saying that the central bank would then sit with them, look at their businesses and give them the foreign exchange required for their operations.
“But those that want to buy imported rice and toothpicks should go and look for foreign currencies to import them. We do not have an alternative because we don’t have enough foreign exchange, what we have is hardly enough for us, for the projects we have entered into agreements on.
“We need steady power supply for small businesses and even security. We need goods roads. Try driving from Apapa to Ibadan and see how many hours you will spend. We also need to fight the insurgents. These are our priorities and not people looking for foreign exchange to import rice and the latest textiles,” he said.
Responding to another question on the restriction placed on operating domiciliary accounts, the president who said he wasn’t aware of restriction, added: “I will ask the governor of the central bank. The central bank team is in a better position to explain that. I have to crosscheck whether people with hard currency in their accounts are not allowed to draw it.”

He also said he would find out from the CBN why commercial banks decided to ban the use of ATM cards abroad, adding: “You know, there are lots of people that want to take money out and they use those cards, they even get innocent people involved through that process and they go out of the country and transfer money through it. I think some of the hard truth needs to be told.”
Focusing on the corruption in the NNPC, the president stated that prosecuting crude oil theft posed an enormous challenge because it involved getting documentation from foreign countries whose cooperation would be needed to successfully prosecute the culprits.
In this regard, he said it might take years before those involved in crude oil theft are brought to book.
He also stated that the low cost of crude had effectively eliminated the subsidy on petrol, adding that there would be no need for subsidy by the first quarter of 2016.
On the state of the refineries and the importation of petroleum products, the president said he wished the issue was as critical to previous governments in the last 16 years.

“When I was in government, the capacity of the refineries was 445,000 barrels per day. We did not import anything; we were exporting the equivalent of 100,000 barrels per day of refined products after satisfying the local market.
“Now, none of the refineries is working. Again, we built more than 20 depots and more than 3,500 kilometres of pipelines and more than 600 pumping stations. We pumped from Zaria to Gusau and Zaria to Maiduguri to Kano. All this infrastructure has been destroyed. Why couldn’t they even maintain what they inherited?” he asked.
On the knotty issue of petrol subsidy, the president more or less admitted that the subsidy had been eliminated, saying: “By the end of the next quarter, you will not be talking of subsidy.
“How much is the cost of crude oil? We don’t have to subsidise anybody. The cost of petroleum is so low that you don’t have to subsidise it. It will find its level.

“Our first priority now, but we can’t do it overnight, is to get our refineries working. If we can refine 445,000 barrels per day at home, that will meet 60 per cent of our local requirement. Then for 40 per cent, we can do the SWAPs.”
When asked when new refineries would be built considering that licences were granted by previous administrations, he said: “I just told you that they failed to maintain four refineries; they failed to maintain about 3,500 (kilometres) of pipelines; they failed to maintain the pumping stations. With the cost of crude oil at over $100 per barrel, they failed to maintain them. Now, it costs $30 to $40 per barrel and you are asking. What questions did you ask them?”
He also declined to give specific targets when asked about the reforms in the oil sector and when a new draft of the Petroleum Industry Bill (PIB) will be sent to the National Assembly.
“We are doing a lot at the same time simultaneously,” he said.
He however added that the 2016 budget would be less dependent on oil revenue, which he described as the proverbial cow.
Buhari also restated his commitment to ensure regular power supply, cautioning however that it could not be made available overnight.
Addressing a question on the amount allotted to the purchase of cars by the presidency and National Assembly in the 2016 budget, he said that he turned down the N400 million car proposal for his office, adding that the cars he has at present are good enough for the next 10 years.
He explained that the presidency’s budget was not for the purchase of cars for his personal use but for the protocol office to cater to visiting heads of states and other dignitaries.
The president further revealed that he was having problems with the National Assembly regarding the TSA and procurement of cars.
He added that the process of government agencies earning monies, spending them and giving government change would have to stop saying: “All government monies have to be paid to the Federation Account and a budget submitted for their operations. I would also have to hold a closed-door meeting with the National Assembly regarding the cars they are trying to buy.
“I hope they haven’t bought them yet. They can’t buy cars for themselves and also take money as car loans,” the president observed.
Buhari claimed that the National Assembly had budgeted about N4.5 billion for the purchase of the said cars.
“I can’t see the National Assembly paying N4.5 billion to buy cars after collecting transport allowance. I will revisit that issue. We have to live within our means,” he said.
Responding to a question on the public declaration of his assets, the president said: “I have declared my assets four times in the past. You have the constitutional right to go to the relevant government agency to go and seek for it. They were deposited at the Ministry of Justice. If the Ministry of Justice cannot produce my asset declaration form, then they too should answer some questions.”
But the president wondered why attention was being focused on him alone concerning assets declaration. “Why me alone, why not others who are governors and ministers?”

Buhari also promised that the federal government’s parastatals would be realigned in view of the fewer number of ministries under his government, adding that the country was being stretched economically and the past administration which budgeted 90 per cent on overheads failed to provide counterpart funding for capital projects.
“China agreed to pay 70 per cent of the cost of railway projects between Lagos and Kaduna and Lagos and Calabar, but the previous government failed to pay the counterpart funding of 30 per cent. You cannot get a better deal anywhere in the world,” he stressed.
The president however appealed to Nigerians to endure the current situation in the country, saying the federal government was employing many avenues to create jobs for the people.

“Most government officials are new in office. We said agriculture and solid minerals are the easiest way to get people employed and our budget would show that. We have virtually all forms of solid minerals across Nigeria.
“We would employ youths, give them crash programmes on education and send them to teach at primary schools. Fashola was not made a super minister for nothing,” he said while responding to a question on why the former Lagos governor was made responsible for infrastructure.