Financial experts and analysts have called for a change in style from preference for foreign goods to patronage of Made-in-Nigeria goods if the naira must sustain its recent gain against the dollar at the forex market.
Likewise, the Governor of Edo State, Godwin Obaseki, has decried the dollarisation of the nation’s economy and called for an end to the practice, in which Nigeria spends about $40 billion yearly on avoidable foreign tastes.
Obaseki lamented that Nigerians “spend about $2 billion paying school fees abroad, $3 million for healthcare abroad, about $500 million buying milk and milk products, and about $10 billion importing food. We no longer earn dollars as we used to, but the dollars keep going up.”
Calling for lifestyles that can sustain the naira’s recent positive momentum, a chartered accountant and risk expert, Olabode Afolayan, said the citizens must de-dollarise the economy and cut their appetite for foreign-made goods, as importation was putting too much pressure on the local currency.
According to him, though the concern for quality is behind some people’s preference for foreign products, Nigerians “need to have a change of mindset and be more patriotic. We need to buy more of home-made items than import.”
In same vein, “we need to start producing our own televisions, our engineering students in the universities should be able to build local technology for this; we need to start manufacturing enmass.”
Afolayan urged the government, which is working to shore up the naira value by clearing the forex backlog and trapped funds of foreign airlines, to also ensure that export is more than import, and equally clamp down on dollar hoarders, who he described as the Big Boys.
More complimentary strategies, according to the founder and chief consultant of B. Adedipe Associates Limited (BAA Consult), Dr. Biodun Adedipe, include that the Central Bank of Nigeria (CBN) deals “transparently with participating banks at the I&E window,” while crude oil is sold to local refineries in naira rather than dollar.
“De-dollarise the economy by declaring illegal any local transactions in dollars (sale of assets, rent/leases and other services, including school fees and medical bills) and ensure that government agencies stop charging local operators and entities in dollars (quite common in the maritime sector).
“President Bola Tinubu should have a direct engagement with bank CEOs to generate ideas and use moral suasion to enlist their support for the market reforms.
“Face the reality that unified exchange rates (not any different than floating the naira) is a poor policy choice for a structurally defective and weak economy like ours.”
Adedipe insisted that Nigeria’s USD GDP will continue to shrink under the unified exchange rates regime, arguing that largely import-dependent economic activities and lifestyle with a low domestic production base are a recipe for unabated depreciation.
“In this case, a growing naira-denominated GDP will become irrelevant so far as the exchange rate depreciation is faster.”
For Capital Market executive at Iron Global Markets Limited – a subsidiary of Iron Capital, Samuel Showunmi, artificial pricing largely due to hoarding and speculating of the FX are responsible for the current huge disparity between the naira and the dollar.
The executive of the Africa-focused investment banking franchise, with a representative office in London, said that for more foreign exchange inflow, the country must meet its OPEC quota of oil production.
According to him, Nigeria is not producing its assigned quota due to “vandalism, oil theft and all of that. The government is doing a lot to mitigate that but needs to step up its game. Nigerians are no longer interested in too much rhetoric, this is the time for action.”
He further advocated that commercial banks hoarding the FX should be sanctioned and other operators reigned into line, adding: “Before, we used to have multiple exchange rates whereby the FG has a particular pegged rate, which is the official rate, and also two other windows with different rates.
“But now, we have a unified exchange rate regime which levels up everything and as a result people are able to speculate and that’s basically why the disparity is huge. Basically, a lot of hoarding is going on in the market now.
“Ordinarily, what determines the exchange rate of two currencies is the balance of trade of that country – the difference between import and export. Those two indices determine how strong a country’s local currency will be.
“The forces of demand and supply between import and supply will determine that, but as it is, we know the country is more import-dependent than an export-oriented economy. That’s a factor, but majorly what we are seeing now is artificial pricing, largely because people are hoarding and speculating with the currency.”
Explaining the way out, Sowunmi advised the president to parley the CBN, minister of finance and other key stakeholders in the foreign exchange system, as well as ensure that oil theft, vandalism and others are stopped in other to increase the nation’s daily oil output.
“The government should show more political will, since the rate we are seeing is not largely backed by fundamentals but speculation. Government should call for a roundtable with key stakeholders in that market because they are Nigerians doing their business, but that business is harming the economy.
“When the country was using the multiple exchange rate regime, government was using the Bureau De Change (BDC) operators to push dollars into circulation but now, they have reversed that and are currently using the banks. What we are seeing now with the banks is currency racketeering within the banking sector as well.
“Government needs to sit with CBN, minister of finance and key stakeholders in the financial system to set the policy right, and on the supply side, we need to see how we to increase our daily oil output because oil revenue constitutes higher portion of our FX revenue.”