The Nigeria Economic Summit Group has partnered the British High Commission and the United Kingdom’s Department for International Development to host a public dialogue on the Central Bank of Nigeria’s foreign exchange policy.
The forum, which was a follow-up to an earlier dialogue held in September 2015, focused on the effects of the forex policy on businesses in Nigeria.
In a statement issued after the event, the forum was said to have highlighted that a weaker naira could create new opportunities for Nigeria to expand and diversify the economy by focusing on non-oil exports.
The event came about six months after the CBN had announced its decision to dump the naira-dollar exchange rate peg ($1/N199).
Despite the CBN’s move towards liberalising the foreign exchange market, participants at the forum said some restrictions and interventions imposed by the regulator had limited the ability of the forex market to “clear and adjust.”
The statement read, “Uncertainty in how the market operates has hindered investment, which might otherwise have eased some of the pressure on the naira.
“Businesses have had to adjust operating models to a new, at times uncertain, cost basis – with disruptions to operations and the need to pass price increases onto consumers. Therefore, more still needs to be done to address the lingering challenges.”
One of the panelists, Nneka Okekearu of Enterprise Development Centre, was quoted as saying, “Restrictions fuel and sustain the parallel market and the major challenge actually for the government is that of supply- which currently is outside their control.”
The Chief Executive Officer, Economics Associates, Dr. Ayo Teriba, said a stress test carried out on the distributional effect of devaluation showed that in all cases, currency devaluation did make poor poorer.
The Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, described the financial market as the “closest proxy to a perfect market.”
He therefore said that any attempt to make the financial market imperfect would result in “all sorts of distortions and exploitation.”
