The General Manager, Western Ports, Nigeria Ports Authority, Chief Michael Ajayi, has urged Nigeria to exit the Organisation of Oil Producing Countries (OPEC) if it wants to continue the devaluation of the Naira.
Ajayi stated that pulling out of OPEC will enable Nigeria to reap the benefits of devaluation.
Ajayi stated this in a paper titled: “Nigeria’s Economy and Way Forward” during the Induction of new members of the Institute of Credit Administration (ICA) in Lagos.
“The devaluation of a currency is primarily adopted to reduce the price of a country’s export while increasing the price of its imports. If this is an acceptable underlying principle of devaluation, it is assumed that a country desirous of devaluing its currency must have an expansive export base of either manufactured goods or agricultural cash crops or both capable of being sold on a massive scale to generate the much needed forex.
“At the same time the high price of its imports is expected to discourage huge imports. A low import tends to reduce pressure on forex thereby conserving a nation’s foreign currency earned.
“Unfortunately, Nigeria is a member of OPEC, which limits every member country to a restricted quota that cannot be expanded to enable Nigeria enjoy the dividends of devaluation. Under OPEC, no nation can reduce or increase the prices of its crude oil far above the OPEC dictated range.
“We are compelled to ask the voodoo economists how Nigeria can gain on the short run from the devaluation policy of government. Nigeria can neither expand production, reduce nor increase the prices of its crude oil which constitutes 95 percent of its gross earnings,” he said.
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