A Professor of Economics at the London School of Economics, the United Kingdom, David Luke has urged the Nigerian government to subsidise credit to manufacturers to make the currency floating policy effective.
Luke said the floating of the Naira was not enough as a policy, hence the government must do all it takes to stimulate exports for the country to benefit from the recent policy.
The Sierra Leonean stated these at a press conference in Abuja ahead of the launch of his book; How Africa Trades, sponsored by the Friedrich-Ebert-Stiftung (FES).
He said the policy has the potential to stimulate exports because Nigerian goods would be cheaper outside the country while there is a potential for an input substitution policy by the government.
Luke described some of the policies by President Tinubu, especially the removal of fuel subsidy and floating of the currency, as bold, insisting that it could work if all other conditions are met.
“We are seeing some really bold moves from Nigeria which have taken most people by surprise. The withdrawal of subsidies on fuel and the floating of the naira—what the floating of the Naira can do is that it could make things that are produced in Nigeria cheap to buy outside of Nigeria and provide an incentive for Nigerians to produce the things that are too expensive to import from outside.
“It could work in Nigeria’s case if other things are done alongside it. But that is not enough because normally when you do something like this, you have to make credit available to those who are in a position to produce. You want to make sure that the banks are able to lend at affordable rates. This means subsidised credit. We have seen it happen in other countries, so I am not saying anything new. Countries that have floated their currencies have done so as a stimulus for exports,” he said
Luke called on Nigeria to lead integration in Africa for trade to thrive and lamented the absence of the populous black country’s leadership in the process, saying South Africa and Egypt, the second and third largest economies, are unable to provide leadership for some reasons.
He explained that the political history of South Africa makes it not suitable to provide such leadership, while the Arab-centric stance of Egypt also makes it not the right candidate to champion the integration.
“Nigerian leadership is needed; it has not been there. If you are the biggest economy, you should be the one championing this kind of integration for the African Countries. I think other African countries like South Africa and Egypt—even Morocco and other big ones—can’t quite do it like Nigeria can do it. South Africa has a very complicated history, which they are still struggling with, so they are not in a position to provide that kind of leadership.
“Egypt has one foot in the Arab world and another in Africa, so I don’t think it is the right country or country to provide that kind of leadership. The same can be said for Morocco even though it is a dynamic economy but much smaller than these other ones. Nigeria should be the one that is leading this new approach to trading among ourselves,” the Economist added.
The country representative of FES, Lennart Oestergaard who said the book would be made available to the public noted that it holds a lot of benefits for the black continent.
