Moghalu criticizes implementation of Nigeria’s economic reforms

Kingsley Moghalu, a former deputy governor of the Central Bank of Nigeria (CBN), on Friday, cast doubt on the effectiveness of Nigeria’s recent economic reforms, highlighting flaws in their execution.

In a statement released on Friday via X, Moghalu acknowledged the unsustainability of both the petrol and forex subsidies.

Moghalu, however, acknowledged the necessity of these reforms but faulted the government’s approach to implementation.

Moghalu specifically criticized the handling of fuel subsidy removal and the floating of the Naira exchange rate. He argues that the removal of the fuel subsidy, while necessary, should have been accompanied by measures to cushion the blow for ordinary Nigerians, such as alternative transportation solutions.

He stated, “The petrol subsidy and the forex subsidy were unsustainable. The fact that the wrongheaded execution of their removal is a very different thing from whether those reforms were needed.”

Moghalu criticised the hasty removal of the petrol subsidy “without proper planning for consequences and alternative transport solutions for the people.

“My position on the fuel subsidy and exchange rate subsidy remains consistent and not populist.

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“Executing painful reforms requires the legitimacy of shared sacrifice. That such a sacrifice on the part of the political leaders of Nigeria is absent, while asking citizens to bear the pain of necessary (although incompetently executed) reforms damages the legitimacy of the reforms,” Moghalu wrote.

Similarly, he faulted the floating of the exchange rate “without FIRST tightening monetary policy and without a substantive Central Bank of Nigeria Governor with a real plan in place.”

Moghalu’s comments raise important questions about the effectiveness of the government’s economic reforms:

• Are the chosen reforms appropriate to address Nigeria’s economic challenges?

• Has the government adequately addressed the potential negative consequences of these reforms?

• What steps are being taken to ensure a successful implementation of these reforms?

The success of these reforms will depend on the government’s ability to address these concerns. Effective communication, targeted support measures, and a coordinated policy approach will be crucial in ensuring a smooth transition and achieving the desired economic outcomes.

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