Dr. Olutayo Obadina, a financial expert, has asserted that the Nigerian government’s decision to float the Naira is the primary cause of citizens’ current economic hardship, rather than the removal of the fuel subsidy. He made this statement during a news conference in Lagos on Friday, presenting his address titled “The Mathematics of Fuel Subsidy: A Critical Look at the Problem and Solution in Nigeria Today.”
Obadina emphasized that stabilizing the Naira is essential for reducing fuel prices and easing inflation, instead of reinstating fuel subsidies. He urged the Federal Government to focus on decreasing Nigeria’s reliance on imports by promoting exports to help stabilize the Naira.
He suggested that bringing the Naira-to-dollar exchange rate down from the current N1600/$1 to around N460/$1 could significantly lower fuel prices to about N450 per litre.
The Real Problem and Solutions
During the conference, Obadina argued that the current economic challenges stem from the ongoing devaluation of the Naira, rather than the removal of the fuel subsidy. He stated:
“The real issue is the devaluation of the Naira. The dollar cost of importing fuel has remained relatively stable, while the Naira continues to weaken. Strengthening the Naira is Nigeria’s only sustainable solution to economic problems.”
He criticized the decision to float the Naira, claiming it has exacerbated the country’s economic issues. He called on President Bola Tinubu to reconsider this policy and revert to a fixed exchange rate, which he believes would help stabilize fuel prices and curb inflation.
Promoting Exports
Obadina highlighted the importance of boosting Nigeria’s exports to increase the economy’s supply of dollars. He proposed the establishment of marketing boards in each state to facilitate the export of key products such as cocoa, groundnuts, palm oil, and solid minerals. He urged the Central Bank of Nigeria (CBN) to determine the dollar amount required to stabilize the Naira. He suggested that the President work with state governments to meet export targets, supported by the Ministry of Commerce.
He recommended that these marketing boards be initially government-led but gradually transition to private-sector ownership, ensuring they do not become another bureaucratic entity.
Leveraging Nigeria’s Medical Sector for Export
In addition to traditional exports, Obadina suggested that Nigeria should leverage its medical sector by encouraging the export of medical professionals. With many Nigerian doctors seeking opportunities abroad, he argued that the government could benefit by overseeing their exports to maximize remittances.
“Out of every three doctors produced in Nigeria, two are willing to work abroad. The government should manage their export to maximize remittances and strengthen the economy,” he stated.
Call for Investment in Agriculture
Obadina also called for increased investment in domestic agriculture to address Nigeria’s food deficit. He encouraged Nigerians to invest in farming to achieve food security and reduce reliance on imported products.
Current Economic Context
In the last 10 months, the Nigerian Naira has experienced an 82% devaluation, dropping from N896 in January to N1635 in mid-October. This devaluation is largely attributed to the floating exchange rate policy implemented by President Tinubu upon taking office in May 2023.
