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Financial analysts have  urged the Central Bank of Nigeria (CBN) to yield to the calls for naira devaluation as a response to the slump in the global oil market. They claimed Nigeria has a lot to gain if the naira is further devalued.

The experts, who spoke at a training for finance correspondents and business editors organised by Sterling Bank in Lagos at the weekend, emphasised that the apex bank, in making policies on the exchange rates, should first understand that the exchange rate mechanism is more important than the rate itself.

To these analysts, the Nigerian  currency should be devalued  now when the required magnitude is still small and the fallout manageable  as further delay might be too costly for the nation to bear.

According to France-based financial expert and media trainer, Jurgen Hecker, now that the price of oil is going down, it translates to current account deficit and serious drop in revenue. According  to him, a devaluation will make the currency more realistic, cause new industries to spring up, while diversification of the economy would take the central position in the Nigerian economy so  that the country can export more, as its exports become cheaper. He said increase in export rate will boost the Nigerian economy a great deal.

The Managing Director, Financial Derivatives Limited Bismarck Rewane on his part believes that it will be impossible for the Nigerian currency to improve in value appropriately until certain bottlenecks like subsidy and leakages are completely removed by the federal government.

He advised that ‘it is better to amputate a decaying leg now that the tumor has not reached up to the knee  than to delay and amputate the same leg when the tumor has crossed the knee. In his words: ”And the worst is to get so confused that the wrong leg is  mistakenly amputated” .

He argued that as long as the government is hesitant to remove subsidy on petroleum products, the heightened demand for dollars by the marketers, among others, will continue to haunt the economy; stressing also that there should be a process that leads to determination of naira exchange rate rather than defending and fixing rates overnight.

He said that the devaluation at this stage of the economy is not about what “we want, but what needs to be done,” stressing that monetary and fiscal authorities have to understand and agree that the problem has reached advanced stage which requires optimal solution.

In Economics, Rewane added that economic agents make decisions and in each decision, something has to be given up. His words: “If you are consuming butter when your income was high, you have to change to margarine when your income falls . If you ate ripe plantain before, you have to change to unripe plantain. You will move from cornflakes to yam, from three newspapers to one. We as individuals make these decisions every day. If we can make them at individual household levels every day, we have to make them at the national level.”