Kingsley Moghalu, a former CBN deputy governor, has asked the federal government to cushion the effect of forex crunch and petrol subsidy removal on the poor masses by reforming the Nigeria economy. 

Mr Moghalu, who appeared on Arise TV on Thursday morning, said it was necessary for the government to remove subsidies on forex and petrol due to the “desperate situation that the Nigerian economy has found itself in”.

He said that the reform on forex and petrol subsidies removal are “moving in the right direction” noting that these reforms should be transparent so as to serve the interest of ordinary citizens.

The former CBN boss said forex reforms should be accompanied by trade reforms in order to avoid Nigerians bearing the brunt of the policies, while businesses are “getting the profits.”

“These reforms are just the first stage. They’re not the end at all; it’s the beginning of a series of reforms that have to take place in the Nigerian economy,” Mr Moghalu said. “The forex reforms must be accompanied by trade reforms. Otherwise, it’s just the people absorbing the shocks and the businesses getting the profits.”

He stressed, “So, we really have to move to trade policies. How can we make Nigeria’s economy competitive? How can we make it productive? How can we then export value-added goods so that our exchanges will attract foreign exchange.” 

Mr Moghalu said the need for the naira to be strong when the economy is dependent on importation will drive away competition in the Nigeria market. 

He added that global economies engage in the devaluation of their currency and sell things at cheaper rates to foreigners to drive their economy.

“I also need to say that we have this fixation with having a strong naira. Having a strong naira when you are not a productive economy, all it does is that it makes you an import-dependent economy. Because having a strong naira makes your import cheaper. Economies that are productive, actually, sometimes they engage in competitive devaluation,” he said. 

“China does this so that their goods are cheaper for foreigners to buy and therefore they get more money into their country, rather than wanting the currency to be very strong.” 

Mr Moghalu added, “So we should also be very careful about what our goal is, if it is to make the market more transparent. It is just to remove corruption and these two measures that I can say for a fact will strike as a very significant blow at corruption in Nigeria that we saw in the oil subsidy that we have seen in the forex subsidy.

“So again, that is also an advantage, the transparency, but it comes with a lot of discomfort for the masses. But if you look at where we were before these reforms, would you rather have everybody going to the black market? Or would you rather have a system that is open? I think there’s a need for openness.”