Even before the inauguration of Bola Ahmed Tinubu as president, Nigeria’s inflation was the highest it had been in over a decade. His decisions to remove the subsidy on Petroleum Motor Spirit and also float the naira further compounded the problem. This is even as the government recently dismissed an assessment by the EIU that; “The CBN lacks experience in conducting monetary policy under a float, and the need to control rapidly increasing inflation will become more acute over time.
The truth, in our opinion, is that this is not the best time for experimenting. The livelihoods of 220 million Nigerians are at stake. The good news, however, is that the president appears to understand the magnitude of the problem regarding the management of the naira and the CBN. There are reports that he resisted the option of simply printing more money to fund the fuel subsidy and has ordered a probe of the apex bank.
It is, indeed, very sad, in our view, that today, the N1,000, Nigeria’s highest denomination can’t buy more than a litre of petrol. It is barely enough to buy a loaf of bread. The government should consider redenominating the naira, which Muhammadu Sanusi attempted to introduce back in 2012. Gone are the days when bags of Ghana-must-go are dragged in the halls of the National Assembly. It is because there is now an alternative; the mighty U.S dollar.
In the midst of all these, we urge the government to resist the temptation of undermining the apex bank’s autonomy. It is bad enough that the CBN has become a political player and allegedly, reportedly, funded election campaigns. Having the presidency make the decision on whether to float the naira or not, print money in excess to what is legal or even be the one to speak on behalf of the bank, will only erode confidence in its policies and the currency it churns out.