The Chairman and Chief Executive Officer of Safe water Energy and Environmental Restoration, (SWEER Global), Dr Thaddeaus Thompson, has said Nigeria's economy is bleeding because the monetary policy of the Buhari administration is benefiting the country’s trading partners instead of the country itself.
Thompson made the statement on Sunday in a chat with Vanguard. He said unlike nations like China who are global trade giants, the Buhari government should have known better than Nigeria which produces little to nothing, should not have devalued its currency.
He described the decision as a 'huge mistake', adding that Nigerians as usual, will have to pay the price.
He said: “It is true that devaluing a country’s currency helps reduce imports and monies owed by the country to foreign trade partners. It also minimises direct borrowing and curtails unnecessary spending on foreign goods.
“Judging from these standpoints every citizen on the borrowing side shares the blame for the consequences that devaluation of currency often brings – ardent poverty. A critical look at the assumptions and subsequent decisions that led to the devaluation of the Naira shows that there were flaws in the decision-making process.
“Devaluation of currency has often had a negative effect on developing nations, especially African countries that produce less to nothing compared to developed nations. Nigeria’s decision to devalue the Naira without taking into consideration its position as a non-supplier nation was a mistake.
“Those who thought devaluing the Naira will increase purchases from Nigeria made a huge mistake because this works only if the country has a high supply tendency or high demand for its goods abroad. It works well for China to devalue its currency because it’s the world’s leading producer of tangible goods.
“China is a high supply nation. Nigeria does not have the same tendency as China, therefore, devaluing its currency will benefit countries buying from Nigeria and not the Nigerian economy.
“If the Naira price of goods is set below a level that enables the nation to cover its costs of acquiring the goods and services sold in the country, the nation will lose money.
“While the government’s scheme of undervaluing the Naira will indeed increase the volume of sales made in Nigeria, this scheme results in the nation, on the net, transferring economic value to the country’s trading partners rather than the nation getting net economic value from those trading partners."