NIGERIA’s Vice President Yemi Osinbajo has faulted the Central Bank of Nigeria (CBN)’s management of foreign exchange (FX), noting that Nigeria might not increase the supply of dollars but could effect a better demand management strategy to address market concerns.
The vice president, who spoke on Monday at the Mid-term Ministerial Performance Review Meeting held in Abuja, also expressed concerns that poor collaboration between the monetary and fiscal authorities affected the efficient delivery of MSME interventions.
“As for the exchange rate, I think we need to move our rates to be as reflective as possible. This is my own respective view, and it is the only way to improve foreign exchange supply to the country.”
Osinbajo noted that Nigeria at the moment might not be able to get new dollars but stressed the importance of a better demand management strategy by the apex bank.
“We can’t get new dollars into the system, where the exchange rate is artificially low. And everyone knows by how much our reserves can grow. I’m convinced that the demand management strategy currently being adopted by the CBN needs a rethink, and that is just my view.
“Anyway, all those are issues when CBN governor has time to address them in full.”
The vice president cited an instance where some Nigerians received COVID-19 interventions more than once because the CBN and the Ministry of Industry, Trade and Investment partnership was weak.
“More importantly, sometimes, we get people benefitting more than once in our interventions because we simply have no line of sight as to what is going on one side. The CBN doesn’t know what we are doing, we don’t know what they are doing. That synergy is absolutely important.
“But I think that one of the most important things is that there must be synergy between the fiscal and the monetary authorities. Sometimes it appears as if there is a competition, especially on the fiscal side.
“If you look at some of the interventions, you find that those interventions are interventions that should be managed by the Ministry of Industry, Trade and Investment. Interventions such as the MSME interventions, the Ministry of Trade and Investment should know what the CBN is doing.
“In other words, if the CBN is intervening in the MSME sector, it should be with the full cooperation of the Ministry of Industry, Trade and Investment
Not just the vice president, THE ICIR had earlier reported that the failures of minister of finance, and her counterpart in Industry, Trade and Investment were hurting the Nigerian economy.
In criticisms of CBN Governor Godwin Emefiele, only very few have mentioned that Finance Minister Zainab Ahmed and Minister of Industry, Trade and Investment Niyi Adebayo have failed to provide support for the naira from the fiscal side.
The African Development Bank’s President (AfDB) Akinwunmi Adesina, who also spoke at the retreat on the topic: ‘Nigeria’s Economic Resurgence: the African Experience’ expressed worry over disincentives to non-oil exports in the Nigerian economy.
He urged Nigerian fiscal authorities to remove bottlenecks in non-oil exports in order to promote economic resurgence.
He also called on the Federal Government to accelerate public-private partnership in infrastructure financing to address concerns of poor infrastructure.
He also urged fiscal authorities working at the ports to be trade enablers and not scuttle trade and investments.
“We should not just decongest the ports, we should transform the ports.”
Meanwhile, economists have expressed worry about Nigeria’s apex bank’s FX management strategy.
“What is happening in the foreign exchange market is a consequence of the CBN policy choice of a fixed exchange the regime and administrative allocation of forex,” Chief Executive Officer of Center for the Promotion of Private Enterprise Muda Yusuf told The ICIR.
“The weak investor confidence is expected to persist in 2021 because of lack of clarity around country’s FX management framework, ” Lagos-based Economic Analyst Damilola Adewale said in response to poor FDI inflow into the country.
Notably, the Finance Ministry and the Ministry of Industry, Trade and Investment are both saddled with the enforcement of the fiscal policies of the government and attracting investment into the economy.
This has not been the case since 2019 as Nigeria continues to witness a huge drop in investment on the back of several wrong policies.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.