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…Tells FG to ramp up crude production
By Bimbola Oyesola, [email protected]
The Nigeria Employers Consultative Association (NECA) has decried the mismanagement of foreign exchange regime in Nigeria and its agonizing effects on businesses in the country.
Director-general of NECA, Adewale-Smatt Oyerinde, also warned that the grey trajectory portends tragedy for the economy, if not quickly addressed.
“The persistent wrong channeling and mismanagement of forex on organized businesses has become agonizing,” he said, adding that business working capital, production, capacity utilization, investment, sales, etc., have contracted significantly, while firms are forced to downsize.
The NECA DG opined that a more stringent action that will significantly reduce the influence of economic saboteurs in the forex value chain must be implemented.
“We believe that if the Parallel market is not legal, then it is illegal and should be treated as such,” he said.
He expressed that the unification of exchange rate policy was supposed to bring into convergence the exchange rates at the official forex market and the parallel market windows.
He said: “At the beginning of implementation, the policy appeared to have gained traction, but has now progressively become undesirable.
“While the official exchange rate stood at about N781.64/US, the parallel market around N900/US$ as noted by the Central Bank of Nigeria (CBN). The differential of which shows a premium of about 21% between the two windows.”
He stated that as observed by the CBN, illegal remittances through inappropriate channels and unlawful selling of Dollar by commercial banks are the core reasons the Naira value has continued to degenerate.
Calling for the abolition of the parallel market, Oyerinde said, “while agreeing with the apex bank, we want to add that the continuous existence of the parallel market, particular in open places is more than culpable for the ugly development. “We believe that as long as the “black market” with the institutionalized name, “parallel market” persists, unruly banks in the country will continue to round-trip, notwithstanding the implication on the economy.”
He however said in order to reduce the pressure of FOREX and other economic challenges associated with it, Government, as a matter of urgency should ramp-up the production of crude oil to at least the 1.8 million barrel per day OPEC quota for the country.
Amongst others, NECA also called on government to pursue and eliminate crude oil theft; resume domestic refining to save FOREX for other productive uses.
While stressing that government must be fiscally disciplined in terms of Dollar dealings, Oyerinde said these measures, will no doubt, avail more forex to CBN for onward intervention in the official forex market.
According to him, this “will enable businesses to source forex to sustain business activities.”
