To end the lingering foreign exchange (forex) pressures, which has hit hard on the economy, Lead Capital Plc has prescribed a deliberate strategy by authorities to move Nigeria out of the present mono-product “trap” by developing other potential sources of forex earnings.
The company noted that due to market imperfections and assessed distortions within the Nigerian economy, demand for forex in relative terms appears to be more than in other countries.
The Chief Executive Officer, Lead Capital Plc, Prince Abimbola Olashore, who gave the advise, said that the exchange rate management of the country is similar to the policies of some countries like South Africa, Brazil and India, but differ with policy changes, which are more frequent in Nigeria.
According to him, the high policy turnover is amplified by the narrow source of Nigeria’s foreign exchange (crude oil sales proceeds), and fast-developing manufacturing sector.
In his presentation on “Foreign Exchange Challenge in the Economy,” he highlighted issues in the economy, which include the present structure of the foreign exchange market that is shaped by the historical source of government revenue other than taxes and the constitutional requirement for a federation account.
He noted that emerging markets’ currencies have depreciated against the dollar, indicating a wider problem in the global economy.
Olashore pointed out that Nigeria is an import dependent economy, with 80 per cent of the items either imported or have high import content, and as such the devaluation/depreciation will make import more expensive, giving rise to borrowing, lack of innovations/creativity, among others.