NESG Urges CBN to Address Multiple Exchange Rate Issues
The Nigerian Economic Summit Group says the Central Bank of Nigeria must address the challenge of multiple exchange rate windows to increase foreign investments and diaspora remittances.
As the Nigerian Economic Summit Group puts it, the Central Bank of Nigeria must address the challenge of multiple exchange rate windows to increase foreign investment and diaspora remittances.
The NESG disclosed this in a communiqué from a meeting of its board of directors held on July 26, 2022.
The group said international investors, being savvy and rational, would not put their money where there was a real risk to their ability to access and repatriate investment proceeds or when the functional currency was in a sporadic depreciation.
NESG says “Multiple foreign exchange (FX) markets with significant price differentials create room for speculation, round-tripping, cronyism, and outright graft, with an attendant adverse effect on the economy. There is no better time to harmonise the FX rates than now”.
Apart from the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) mechanism where a dollar exchanges ay N420-N430, the parallel market window sells at above N650/$. Nigeria is also hard hit by revenue shortfalls with revenue to GDP around 7 per cent – among the lowest of the emerging markets.
NESG noted that Nigeria must take a decisive action to tackle the government’s revenue challenges which could not be divorced from leakages through the large-scale crude oil theft, difficult operating environment for businesses, and lack of innovation in tax collection/administration, among others.
“We strongly believe these leakages have continued unabated because of the absence of sanctions and ineffective tax systems.”