The Chief Executive Officer of the Centre for the Promotion of Private Enterprise and an economist, Dr Muda Yusuf, in a chat with The PUNCH on Sunday, welcomed the appreciation of the naira. He, however, highlighted some efforts that can be made to sustain the rise.
He said, “The recent improvement in the value of the naira, I’m talking about the naira exchange rate, is a welcome development. It is a development that gladdens the hearts of individuals and corporations because the exchange rate issue has been one of the biggest challenges facing the economy. It has been one of the biggest drivers of inflation, the biggest driver of the high cost of doing business so it is a great relief that we are having this development. Our prayer and hope is that this should be sustained going forward.
“You can ascribe this to several issues. First, we have seen an improvement in our reserves which reached the $40bn mark a few weeks ago, and that implies that the CBN has more power to intervene in the market, and in truth, the CBN has been intervening in the market to stabilise the currency.
“I would like to observe that in the last five months or so, we have seen relative stability in the naira exchange rate, which is a welcome development. Now, we are beginning to see a strengthening of the currency, so the level of our reserves has contributed to this as it elevates the confidence of foreign investors. Then in the last few months as a result of reforms in the foreign exchange market, we are seeing a consistent improvement in autonomous foreign exchange inflow in the country, especially from the international money transfer operators.”
Yusuf pointed out that the recent Eurobond offering of Nigeria has also handed the country a boon as it increased investors’ confidence.
“As you can see, it is a combination of factors but what is important is to sustain it. One critical factor in sustainability is our fiscal environment. The level of government spending, the level of fiscal deficit and the level of debt accumulation are variables on the fiscal side which could create problems or impede the progress being made in the appreciation of the currency.
“The appeal is to the fiscal authorities to ensure that this development, this positive outlook of the exchange rate is sustained by complementing the monetary side. Our fiscal operations should be such that doesn’t create liquidity challenges in the economy such that you have new pressure on the naira. We need to moderate the level of deficit, the level of debt, and the moderate of government expenditure. I think these fiscal measures are necessary to complement what is being achieved.”
The Director-General of the Nigeria Employers’ Consultative Association, Adeyemi Oyerinde, in his comments called for a sustenance of the stronger naira.
“The recent appreciation in the naira exchange rate, particularly in the last week, standing at N1533.76/$ on Friday, December 6, 2024, which indicated an appreciation of over eight per cent is a welcome development. It is particularly welcomed by the private sector which is facing acute forex challenges for the importation of raw materials and machines that are not produced in the country presently.
“While we recognised and appreciate the recent improvements, it is, however, difficult to definitively pinpoint the reasons for the improvement except the recent $2.2bn Eurobond loan secured by the Federal Government or the upsurge in diaspora remittances as a result of the festive season.
“However, to sustain and improve the appreciation in the naira value, which is what the private sector desires, we urge the Federal Government to strengthen existing measures to upscale crude oil production for export, entrench a better monetary and exchange rate management through judicious and productive allocation of available forex, promote non-oil export and further encourage domestic refining of crude oil by private individuals and, of course, the Port Harcourt refinery to end importation of refined fuels, and improve government patronage on made in Nigeria goods and services to lower dollar movement outside the country.”
