23 January 2017, Lagos — As the Forex crisis lingers to 2017 amid economic recession, experts in the financial sector are calling on the Central Bank of Nigeria (CBN), to harmonise exchange rate, to enhance stability in the foreign exchange market.
At the Stock Exchange, some financial analysts who spoke on the continuous scarcity of forex despite measures taken by CBN to address the situation said a single exchange rate will pave the way for local and foreign investments to thrive.
The President, Constance Shareholders Association of Nigeria, Shehu Mikail, said, “The CBN should harmonise exchange rate like what obtains in advanced countries. This is imperative because a single exchange rate structure allows the influx of Foreign Direct Investments (FDIs), as investors will be encouraged to put money in various sectors of the economy.
There is nowhere in the world you will find different exchange rates. It is always a single rate. It is only in Nigeria that you see oil marketers, manufacturers, importers and even travellers getting forex at different rates.”
He added, “The only thing I know that is different in the exchange rate is the traveller’s cheque. It is in form of the exchange rate but you cannot use it to get cash until it is converted. If you are using traveller’s cheque, you have to sign a personal signature on it, but when it comes to cash, it must be a single exchange rate for every entity.”
On the economic implications of multiple exchange rates, he explained, “It does not allow steady economic activities, which is why a single rate is needed to normalise economic activities in the country. When forex is not evenly sold to customers, many investors are affected. On measures the CBN can take to harmonise the exchange rates within the shortest time possible, he pointed out, “We need stable forex policies to control the system.
The Government must clear roadside black marketers to ensure that such illegal forex markets do not exist again. In doing that, we should ensure that there are registered Bureau de Change (BDC) at the airports for travellers, and other places where individuals, importers, manufacturers as well as operators of Small and Medium Enterprises (SMEs) can easily get forex to do their businesses.
Also, the BDC must change dollar at official rate authorised by the apex bank, which implies having a unified rate for all customers. Licenses must be given to BDC and they should have officers where people can go to like banks.
The CBN should monitor compliance, because even the cashless monetary policy that was widely accepted across the country is fast becoming less effective, and it seems nobody is monitoring the banks anymore.
For example, money transfer to another State ought to be done within 24 hours, with the cashless policy in place, but it does not work like that again.
On budget 2017, he said, “I have seen the components of the budget, but pragmatically, we do not have standard economic policies for implementation. Allocations for essential sectors are not sufficient to revamp the economy.
We have greater allocations for recurrent expenditure than capital projects, with the capacity to create jobs. The recession is worsening by the day and practical solutions are needed to address it.
On the way forward, he said, “The current high-interest rate should be reduced for investors to get loan easily. A situation where the CBN says one thing and the minister of finance says another is not helping the economy. There must be effective coordination of fiscal and monetary policies to stimulate growth.
*Udeme Clement – Vanguard