Nnaji, Alaje, Other Experts Proffer Solutions to Nigeria's Forex Crisis on Legit.ng X Space
- Nigeria's foremost online news platform, Legit.ng, held its X Space on another interesting conversation
- The online discussion was centred on issues around the declining naira and how it can be rescued
- Experts shared their opinions on the strategies for stabilizing the naira, with a focus on the key economic issues
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market
Experts have recently highlighted issues causing the naira to lose value against foreign currencies.
They made their contributions during the Legit.ng X Space conversation that was held on Friday, November 3, 2023, gathered over 500 listeners.
Source: Original
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The discussion, moderated by Nkem Ikeke, Legit.ng Copy Editor was centred on rescuing the naira and saw experts share their views on events around the economy.
Experts highlighted their views
Paul Alaje, Chief Economist at SPM Professionals and Director of Research and Development at the Nigerian Economic Summit Group (NESG), opined that perception is fueling the continuous fall of the naira.
He said that people don't have confidence in the naira. According to him, when confidence is missing in an economy, it will collapse.
Alaje said:
“This economy doesn’t have confidence in our education and that is why we are spending trillion to import education. We spend a lot of money going abroad to take care of our health.
“The moment you start spending that huge amount on foreign education and other foreign services, you are telling your foreign reserve to collapse.
"People collect their salaries, convert to the dollar just so they can hold, waiting for the currency to collapse and change it back to the naira all because there we lack confidence.”
Nancy Nnaji, Host and Executive Producer of Moneyline with Nancy on AIT noted that Nigeria is where it is today because of the mismatched policies delivered in the last few years.
She noted that the naira getting to this level did not just start overnight. According to Nnaji, the exchange rate is determined by many factors, including demand and supply, "but the current crisis is a result of supply."
She said that Nigeria mostly depends on the sale of crude oil, but the country has not done well with oil receipts.
She said that since oil receipts depend on international prices, Nigerians are supposed to benefit from the increase in crude oil prices in the global market.
Nnaji said:
“I must say that this is the worst time in history that oil price is close to $100 and Nigeria is not smiling to the bank.
“We are not selling as much as we are supposed to sell. OPEC quota is supposed to be about 1.8 million barrels per day but in the last few months, we have been doing an N1.1 or in some cases less than one million barrels per day because of oil theft and corruption within that space.
"The CBN failing to remit money to the CBN in the last two to three years has affected government revenue. This further impacts the naira because there is not enough foreign exchange.
“Our central source of forex is diaspora remittance because there are so many Nigerians abroad. This has also declined greatly, especially after COVID. If the way we make foreign exchange is being impacted, it will reflect on our naira.”
In her view, Chinenye Uwanaka, Co-founder of Africa Policy Conference and Managing Partner, The Firma Advisor, explained that the instability in the naira is a case of policy somersault. She cited the naira redesign policy, which led to scarcity and hardship for Nigerians.
She added that banning some items from accessing forex is another draconian policy that didn't work "because if people don't have an alternative, they will smuggle goods which would be very expensive and cause inflation."
Uwanaka stated:
“The citizens are suffering from the government neglect and a rot in the system. Usually, before implementing harsh, policy, safety nets are supposed to be put in place.”
Victor Enengedi, HOD, Business News Desk at Legit.ng noted that a lot of things happened in the past and were unchecked by different administrations.
He said there had been earlier about the naira reaching this level in the past, but policymakers failed to take the necessary precautions, which has led the country to where it is.
According to him, the solution will not be instant as it will take a while for important policies to be checked.
"What has happened can be better described with the demand and supply scenario. A lot of people need the dollar and there are fewer sellers. When a commodity is highly demanded, there has to be some level of scarcity."
Referring to the Bureau de Change as a necessary evil, Enengedi called for accountability. He also advised proper setup around the BDC operations in the country.
Source: Legit.ng
