Experts, including a Professor of Economics, Sam Olofin, have suggested that to shore up the Naira, the Nigerian currency must be rescued from the hands of those he described as powerful operators in the foreign exchange market.
Prof. Olofin noted that the time has come, to define what is legal and distinguish such from what is criminal, have the criminals apprehended and made to face severe consequences for their actions.
He made the suggestion during a public lecture organised by the Nigerian Economic Society (NES) themed, “Recent Developments in the Nigerian Foreign Exchange Market: Issues, Options and Way Forward”, which held on Thursday at the CBN Centre of Excellence Lecture Theatre, University of Ibadan, Ibadan.
The former President and Fellow of the NES, who was Guest Lecturer at the event, said the attention of the government must be focused on the parallel or black market, noting the need to bring it under control, as the passion of the powerful operators is to maximise profit and hold the market and the value of the Naira to ransome.
He stated: “Without sounding too simplistic or offering a silver bullet that would solve the seemingly complex problems in the foreign exchange market, our attention should be focused on this powerful segment of the market, the so-called parallel or black market. We have succeeded, either deliberately or unwittingly, in creating a monster that has been well protected.
“It is ruthless and hardly cares about anything else other than its selfish profit motive. It is either we bring this monster under control or allow it to strangulate the Naira. If Naira must be saved…, the time has come to rescue it from the hands of those powerful operators in the foreign exchange market,” Prof. Olofin posited.
He asserted that the ‘willing buyer and willing seller‘ model would not do the job as the parallel market operators seem to operate as unknown entities that are above the law, driven by their passion to maximise profit.
Olofin alleged that the operators have unrestricted access to official supply sources and are not restrained from operating in the parallel market, advocating that the Naira must be protected at all cost.
He said: “The depreciation of the Naira continues on a daily basis and it appears that if appropriate steps are not taken, as the value races towards the N2,000 to a dollar mark and possibly beyond, this would have unimaginable consequences on the rate of inflation and the entire economy.
“The immediate issue of concern in the near and immediate future as to the way forward should be on how to put a halt to this free fall, stabilise the value of the Naira and ensure effective operation of the foreign exchange market,” Olofin declared.
Earlier in his address of welcome, the President of the NES, Prof Adeola Adenikinju, said the choice of the theme is apt as it is perhaps the most important issue in Nigeria today.
Adenikinju stated: “From Aso Rock to the CBN Headquarters and NNPC Towers; from Marina Street in Lagos, to Bodija Market in Ibadan; from the fish seller in Yenagoa, to suya seller in Sokoto to the farmer in Markurdi; the exchange rate is on the lips of everyone. Hence, the choice of the topic for the 2024 NES Public Lecture.
“The subject of foreign exchange is within the ambit of economics. The exchange rate is a price. However, for an import dependent economy like ours, it is a price that influences other prices in the economy – products, money, and factor markets. The spike in inflation, in the last few months in particular, has been largely driven by the exchange rate. The pass through effect from the exchange rate to other prices is quite high,” the NES President noted.
He explained that the government, especially the Central Bank of Nigeria, has reacted to the sharp and persistent devaluation of the naira with new policies, expressing worry that the effects of a particular policy have not been assessed before others are quickly established.
Prof. Adenikinju noted that such action has a tendency to add to the uncertainty and the flight to safety postures of economic agents, who continue to hold dollars outside the banking system.
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