Expert: Get a single exchange rate and Nigeria’s economy will adjust

Donald Kaberuka, former president of the African Development Bank (AfDB), says once Nigeria can get a single exchange rate in place, the nation’s economy will adjust.

Fielding questions from TheCable, at the World Bank, IMF meetings in Washington, Kaberuka said Nigeria could do a lot with oil at $40 a barrel.

When asked what Nigeria, as a regional engine, must do to restore rigorous growth in the African sub-Sahara, the Rwandan economist said: “As for Nigeria, I cannot speak for the Nigerian government, the authorities are here, they can speak for themselves.

“I can only give an expert view, and here is my view; in the years past, Nigeria’s budget was based on $40 per barrel of oil, and you did quite well, remember,” Kaberuka said.

Kaberuka, who was AfDB president from 2005 to 2015, said oil above $50 a barrel is an exception for Nigeria, adding that the country could blossom at $40 a barrel.

“$50 and above was an exception, so it is a new normal for $40, and with even $40, you can do quite a lot, in terms of composition of expenditures, internal subsidies, the kind of things you have done in the past.

“It is not only on the fiscal side, on the monetary side, I do like to insist on the dependence of the central bank; in law and in fact. And then the central bank uses that independence to ensure there is accommodative monetary policy.

“Right now, they have about five exchange rate and it has been very complicated, and at some point that has to come together, and when it comes together the rent will disappear and you will find out that the economy will adjust.”

On the rest of Africa, the 65-year-old said most of the economies blaming the slump in commodity prices commodity prices, for their growth are not painting the whole picture. He said commodity prices play a role, but the bigger issues had to do with policies.

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