The Nigerian Economic Summit Group has urged the Central Bank of Nigeria to harmonise foreign exchange rates as the nation battles scarcity of forex and dwindling value of the naira, amongst other economic challenges.
NESG’s call comes hours after the Nigeria Employers Consultative Association asked the government to allocate available forex to manufacturing and other productive sectors of the economy.
However, in a communiqué from a meeting of its board of directors held on July 26, 2022, NESG charged the CBN to address the challenge of multiple exchange rate windows in order to improve the inflow of foreign investments and diaspora remittances.
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.
“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,” NESG counselled.
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 said that Nigeria must 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.”
Nigeria’s debt reached N41.6 trillion in the first quarter of 2022, with the country paying back creditors with 118 per cent of revenue between January and April 2022.