There have been debate on this forex debacle for years and showing the connection between fuel price and the value of the Naira. Every increase in fuel price is followed by a greater fall of the Naira, calling for more subsidy payment and another increase “to remove subsidy”.
It’s been a vicious cycle since the Babangida days. The reason is simple. Increase in price of fuel only produces more Naira in the Federation Account to be shared out to State Governors. They return to demand for dollars for both legitimate and illegitimate reasons. They hit the market for dollars and the price of the Dollar goes up due to excess of demand over supply.
The cycle is repeated every month that allocations are made. Money from sale of petrol is like printed money because the Govt is the supplier of fuel. We have refused to deregulate so that anyone could either bring in fuel or produce as much as he can. The counter measure that can be taken when fuel price is increased is to make certain that no direct allocation of the excess revenue is shared out to the States. Rather, specific projects should be targeted and funded with the money.
The benefit of the money will trickle down to the people instead of going towards purchase of forex for money laundering. The inflationary pressure of the excess Naira will be reduced.
Published by Chuks Nwachuku
