Addressing the media in Abuja on Monday, TUC President Festus Osifo, said this was because Nigeria is largely an importkng nation.
According to him, the Naira has officially devalued by over 250% from N460 to N1600 since May 2023.
Osifo believes that until the real value of the naira is determined by the nation’s financial managers, the exchange rate of the naira against the dollar will continue to dwindle.
“The monetary policy managers should determine the true value of Naira. Allowing the official exchange rate to devalue alongside the black market rate that does not follow market fundamentals is not the right approach to accomplish this.
“Local and international financial institutions have determined the true value to be between N580 to N650 to a dollar in June/July 2023. The FG needs to work towards achieving this realistic rate.
“Once its achieved therefore, the exchange rate will then be adjusted on an annual basis using factor K that will be determined by US/NGN inflation figures”, Osifo said.
He suggested that the adjustment can also be made every 6 months to avoid sudden shock adding that it makes no economic sense to allow Naira to float freely against an international currency that is in acute shortage of supply due to excessive demand.
“With this in place, investors could forecast the returns on their investments with some degree of certainty. This stability will result in the restoration of confidence in the market and foreign direct investors will monitor this stability over time before eventually returning to the country in droves.
“This can be easily implemented by CBN, who are the managers of our monetary policy, by directing banks to reject dollar bids above the threshold of N580/650. This was done between July and October 2023 when the exchange rate stabilized around 790 Naira to a dollar.
“The current surge in demand of USD is not just from manufacturers or importers of goods but also from students studying abroad, individuals engaging in medical tourism, those earning cash illicitly; as it has been noticed that there are a lot of corruptly earned cash chasing the Naira and they are willing to buy it at any price”, he said.
Custom Exchange Rate
Another solution proffered by the TUC to manage the nation’s economy is what it called the “Custom Exchange Rate” for Goods used in Manufacturing. ”
The TUC Leader observed that presently, the exchange rate used by customs for clearing machinery, spare parts and other items that feed into manufacturing lines and processes, farm equipment, should be revised to between N580 to N650 to a dollar or at best a tax waiver should be given to some of the imported goods that are critical to the manufacturing and agricultural processes.
According to Osifo, “Customs should focus on facilitating trade, rather than merely being revenue collection institution. It serves no good for customs to be reporting trillions of Naira as revenue when manufacturing companies and commercial farms across all sectors that would have been dependent on the cheaper cost of clearing input products and machineries are stiffened.
“These businesses could have the propensity of having huge profits that the government could tax and in turn, realize more revenue than what could have accrued from customs.
“We demand that this should be done within the next two week”.
Other issues of concern to the TUC and height lighted by its President at the briefing include the dollarisation of political party primaries and electioneering, food hardship, allegation that sub-nationals throw billions of dollars monthly into the parallel market, clam down on speculative trading in the foreign market and need to patronize made in Nigeria goods among others.
