Stemming the fall of the naira – Punch Newspapers
The Nigerian economy has suffered little in recent times, with an inflation rate of up to double digits and an exchange rate of the naira of up to N600 to $ 1 on the parallel market and at the official market rate. The Nigerian naira’s steep fall against major world currencies like the dollar, pound and euro has been the same for months. Defying all attempts by the Central Bank of Nigeria, through its monetary policy framework, to stop the slide.
Nigerians need foreign currency for medical or health tourism. For example, those who seek better medical care or are referred abroad primarily due to our poor or inadequate healthcare facilities. This category of people buys foreign currency for their travel, accommodation and maintenance, accommodation and then the cost of the actual treatment in the foreign country. The expenses can be very exorbitant and reach hundreds of thousands in foreign currencies, for example countries like Dubai, India, South Africa, USA, UK, Germany etc. This has not been the case until now.
Another reason for the high demand for foreign currency by Nigerians is educational tourism. Many young Nigerians are educated in high schools, colleges and universities abroad. During the admissions process, you see scouts or representatives of these institutions rushing into our schools and hotels to try to convince parents and students why their institutions – in Ukraine, Cyprus, Canada, the States – United Kingdom, Dubai, United Arab Emirates, Malaysia, etc. are the best choice. These students need forex to pay for tuition, travel costs, visa, accommodation / accommodation and food, etc. Parents / guardians and students spend tens of hundreds of thousands of dollars in foreign currency to meet all of these demands and demands.
The manufacturing sector or the organized private sector and small and medium-sized businesses also make significant use of forex. They import spare parts and machinery from foreign countries or, in some special cases, such as conglomerates from their home country, for example. UAC, NB Plc. Unilever, PZ, P&G, etc. Then, of course, they import raw materials or additives for the manufacturing process in their different industries.
Finally, the federal government, through its ministries, departments, agencies and parastatals, purchases foreign exchange for its own use, typically for the import of goods and services relevant to its performance and day-to-day operations.
In addition, there are other importers who use forex to import goods that are on the prohibitive lists of illegal and contraband items. All of this puts a strain on hard earned forex, given the huge demand and need for a large developing forex country to run a booming economy like ours. As a people, we must be wary and do what is necessary.
Either way, the federal government, through the central bank, has attempted to fill loopholes in the operations of the Bureau de Change to verify any sharp practices such as speculation or hoarding and ensure that he sells currencies to genuine buyers. In addition, the CBN has intervened in its regular disbursement during interbank sales of foreign currency that priority should be given to small and medium enterprises and industries. This is to help consolidate and stimulate the local economy by building the capacity of our local industries and increasing the capacity utilization of our manufacturing and production sector.
The federal government can do more through legislation and pragmatic measures by ensuring that its upstream integration policy is not seen as mere talk. Agriculture should be viewed as a trading enterprise or enterprise and oriented towards exporting for commercial purposes, not for subsistence or smallholder farming. It should be mechanized so that it can contribute to the GDP. If this is done and Nigeria is self-sufficient in food production, then we can be said to be food secure.
With food security, inflation will go down, our economy will be robust, we will have enough and even have to export to earn more forex which will greatly help to reduce the exchange rate of the naira against other major foreign currencies in the world. . Thus improving the rating of our external trade balance.
Also, if the manufacturing sector is scaled up and our industries are producing at full capacity contributing their quota to the GDP by producing semi-finished and processed products that have better export value. It will help diversify the economy, generate more foreign exchange necessary for the overall development of the country and reduce the depreciation of the naira.
Likewise, small and medium-sized enterprises should be better empowered and encouraged to be export-oriented and add value through special government programs and programs. All these elements aim to make them produce for export and earn the forex necessary for the development of the country.
In addition, punitive measures should be imposed on errant BDCs that flout central bank rules and regulations regarding forex sales and operations. In addition, other financial institutions such as commercial banks need to be properly supervised and monitored to ensure strict compliance with laws and regulations governing trade and foreign exchange management.
In the future, the naira will be able to withstand this fall if the supply exceeds the demand for forex and our economy is reorganized as shown above by diversifying it. In addition to attracting more foreign direct investment, which will help to improve and increase employment, which in turn will boost the economy by improving the purchasing power of the average Nigerian, which will increase to in turn the ability of people to purchase goods and services.
Samson Ayooso, a public policy analyst, wrote from Port Harcourt. He can be reached on 08097279934
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