Import dependence worsens inflation, currency weakness — Financial expert
Financial expert, Prof. Ken Ife, has highlighted the import dependence nature of the Nigerian economy as a major challenge contributing to inflation and a weak currency.
Ife, who is a member of the Governing Council, Ministry of Finance Incorporated (MOFI), expressed his concerns during an interview with journalists in Abuja on Wednesday.
Ife emphasised that not much has changed in terms of the structure of Nigeria’s economy over the years.
He stated that the country is still largely involved in an international division of labour, where it primarily provides raw materials and acts as a consumer of finished products.
The financial expert pointed out that any attempt to add value to Nigeria’s exports is often met with resistance.
This import dependence makes the country highly vulnerable to external global headwinds, which ultimately impact the economy.
For instance, the mortgage crisis in America and the Russian-Ukrainian war had adverse effects on Nigeria due to its import dependence.
“Any attempt to add value to our exports is usually met with stiff resistance.
“When a country is import dependent, it becomes so vulnerable to any external, global headwind, and it affects the economy
“The mortgage crisis in America, and the Russian-Ukrainian war affected us because we are import-dependent.”What we have is imported inflation,” he said.
He said that the importation section required four billion dollars monthly to import goods and services into the country.
“But because we have excess liquidity in the system, speculators in the system are simply keeping the dollar as a store of value.
“They are now betting on the Naira, and the forward bet on the Naira is that it will continue to go down.
“Everybody keeps holding the dollar and using the dollar to trade with the expectation that the Naira will contin`ue to fall.
“If the expectation is that the Naira will appreciate, people will quickly sell dollars,’’ he said.
Ife said that excess liquidity was also a challenge to the Nigerian economy.
He said that people with so much Naira go looking for dollars.
