Nigeria’s Central Bank should impose restrictions on short-term portfolio investment flows to prevent damage caused to Africa’s biggest economy if investors exit at short notice, a member of its monetary policy committee (MPC) has said.

Chibuike Uche, an academic, said history has shown that such speculative capital inflows only offer temporary relief, mainly in the arena of exchange rates, and generally cause more harm than good, minutes from the 12-member MPC March meeting showed.

“I therefore see no harm for the country to insist that the only types of foreign capital it will welcome are those that have long term investment intentions,” he said, the minutes showed.

Nigeria witnessed increased foreign investment in local currency denominated bonds prior to last year’s foreign exchange restrictions introduced to conserve depleting forex reserves.

The country, Africa’s top crude exporter, faces its worst economic crisis in years as a result of dwindling oil revenue, which last year prompted the central bank to impose a currency peg to conserve foreign exchange reserves.

Last year, JP Morgan removed Nigeria from its Government Bond Index (GBI-EM) in protest against the currency controls, which it said make transactions on local currency denominated bond too complicated.

Most foreign portfolio investors sold off their local bond holdings, triggering significant capital outflows, reports Reuters.

Uche also seeks imposition of ban on all imports of products that can be produce locally to boost support for local production and curb depletion of foreign reserves.

Other policymakers at the March meeting also expressed concerns on the wide margin between official interbank forex market rate and the parallel market, noting that this provides an opportunity for currency arbitrating.

“The gap between the official and parallel market is a source of concern because for rational economic agents it encourages round tripping which is very devastating to the economy”, said Dahiru Hassan Balami, another MPC member.