FG, States mull retreat on alternative to Naira devaluation

The federal government and 36 states governors are considering organising a retreat to consider alternatives to the devaluation of naira which the presidency and the Central Bank of Nigeria (CBN) have completely rejected.

Governor Nasir El-Rufai of Kaduna State disclosed this yesterday while speaking at a session on the second day of the The Economist Nigeria summit held in Lagos.

The revelation by El-Rufai was reinforced by Governor Ibikunle Amosun of Ogun State who also said at the event that the governors completely supported the decision of the federal government not to further devalue the naira.

The two governors also stressed the need for government to embrace cost-saving activities in the face of the sharp drop in government’s revenue. The second day of summit also had in attendance Governor Tanko Al-Makura of Nasarawa State.

Commenting on naira devaluation debate, El-Rufai said: “I have clearly not seen the benefits of devaluation to us. Is parallel market the only way to solve the scarcity problem? I don’t think so. The only value of devaluation is the removal of corruption in the distribution system. We will be having a retreat soon to look at other options other than the orthodox system of devaluation. We cannot continue to subsidise the elites. The elites did not vote for us.”

El Rufai urged his colleagues to reduce the size of their aides, saying: “you cannot run a government that you cannot afford. You cannot exist as a government whose only function is to pay salaries of a very small percentage of the population. It is unjust.

“So state governments and the federal government must undergo significant belt tightening with a view to reducing cost and finding ways of  enhancing revenue.”

With the slump in crude oil prices, the Kaduna State governor said this “is the worst time to be a state governor.”

“The guys who had fun were governors in the last eight years, which were governors when oil was $100 per barrel. Many governors are now struggling with $30 oil with a government structure addicted to $100 oil. So it’s tough, no person can see 70 per cent of its income disappear without making painful adjustment, and that is virtually what all the states are going through.

“When we came in, 27 out of 36 states have to be bailed out, that is three quarters; they could not pay salaries. Happily, Kaduna State was not among but we are all struggling. In Kaduna State we are lucky we are still able to pay our pay roll obligations every month without having to wait for federation account.


“This is because we have sliced the size of government, we have made some sacrifices still the way the trajectory of oil prices is appearing, we have to continue to make painful adjustments, cost cutting, enhanced revenue generation and lots of sacrifice. I said this is the worst time to be a governor. But on the other hand, it is also an opportunity for Nigeria. I think we have gotten too used to high oil prices, that we have lost our sense of innovation,” he added.


On his part, Amosun expressed support for President Muhammadu Buhari’s position on naira devaluation, saying it is not good to devalue naira because Nigeria is still an import dependent nation.


Let those who are importing source for dollar. We should have a secondary foreign exchange market; if you like, call it parallel market. So, people who cannot import genuine things that we need can go to such market to buy at whatever rate but for those who import things that are genuinely needed will get the official foreign exchange rate.


“But the good news is that despite all this economic problems, we have been above board. We are still coping for example, so many states are struggling, because there was a time crude oil was selling for $120 but now it is below $40,” he added.

On his part, Governor Al-Makura said there was need to amend the constitution so that states can have powers to make some economic decisions.

He said: “We need to amend the constitution to give greater freedom for mining. Agriculture is largely a state and local government matter. Constitution needs to be amended to have a true federalism.