Financial expert calls for patronage of made in Nigeria goods to boost the Naira

Financial expert calls for patronage of made in Nigeria goods to boost the Naira

...Says Nigeria spends $40bn annually importing foods, paying school fees, health care treatment

In order for the Naira to sustain momentum against the United States dollar, financial experts and analysts have called for the use and purchase of made in Nigeria goods as against foreign made goods.

They also sought for an end to dollarising the economy, saying Nigeria spend about $40 billion yearly importing foods, paying school fees and health care treatment among others services abroad.

Recall that the Naira had recently sustained gains against the dollars in the last few days, both in official and parallel markets.

Also, the Governor of Edo state, Godwin Obaseki, decried the dollarisation of the nation’s economy.

“We spend about $2 billion paying school fees abroad, $3 million for health care treatment abroad, about $500 million buying milk and milk products, and about $10 billion importing food. We no longer earn dollars as we used to, but the dollars keep going up,” Governor Obaseki said.

However, speaking to Journalists, a Chartered Accountant, Financial and Risk expert, Olabode Afolayan, disclosed that to sustain the momentum, the citizens must cut their appetite for foreign made goods and also De-dollarise the economy.

According to him; “Importation is putting so much pressure on the Naira. There should be a change of mindset by Nigerians.

“We need to have a change of mindset and be more patriotic. We need to buy more of home made items than importation. Though, why people not buying Nigerian made things is due to quality. So, we need to do what Chinese did by going local.

“We need to start producing our own televisions, our engineering students in the Universities should be able to build local technology for this. We need to start manufacturing enmass,” he advised.

Afolayan further stated that the government should encourage export, saying the country export must be more importation.

He also urged government to clampdown on Nigerians hoarding the dollars, as they are more powerful as the government is doing more to maintain momentum against the dollar.

“We need not to sabotage the effort of government. The government should talk to those hoarding the dollar because they are the Big Boys of Nigeria and not ordinary Nigerians.
When they hoard, government should clampdown on them because government is doing everything to make Naira appreciate by clearing the forex backlogs and clearing trapped funds of foreign airlines. I learnt the government cleared some of those outstanding funds, hence the Naira appreciated.

“Also, government should look inward, they should ensure export is more than import and with that, the Naira will sustain its momentum against the dollar, ” Afolayan stated.

However, speaking on strategies that can be used for the Naira to regain strength, the Founder and Chief Consultant of B. Adedipe As­sociates Limited (BAA Consult), Dr. Biodun Adedipe, pointed out; “the CBN should stop government agencies from charging local operators and entities in US dollars.

According to him, the sale of crude oil to local refineries should also be made in Naira rather than in US dollars.

Adedipe said, “CBN should deal transparently with participating banks at the I&E Window. De-dol­larise the economy by declaring as illegal local transactions in US dollars (sale of assets, rent/leases and other services, including school fees and medical bills). The apex bank must ensure that government agencies stop charging local operators and enti­ties in dollars (quite common in the maritime sector).

“Other suggestions include the need to ensure that the sale of crude oil to local refineries should be made in Naira rather than the dollar.“

“President Bola Tinubu should have a direct engagement with bank CEOs to generate ideas and use mor­al suasion to enlist their support for the market reforms. Face the reality that unified exchange rates (not any different than floating the Naira) is a poor policy choice for a structural­ly defective and weak economy like ours,” he added.

Adedipe said Nigeria’s USD GDP will continue to shrink under the unified exchange rates regime, arguing that largely import-de­pendent economic activities and lifestyle with low domestic pro­duction base are a recipe for un­abated depreciation.

“In this case, a growing Nai­ra-denominated GDP will become irrelevant, as far as the exchange rate depreciation is faster!” he con­cluded.

Also speaking, a Capital Market Executive, Samuel Showunmi, said artificial pricing largely due to hoarding and speculating of the Forex is currently responsible for the huge disparity between the Naira and the dollar.

Showunmi, who is a Capital Market Executive at Iron Global Markets Limited (a subsidiary of) Iron Capital an Africa-focused investment banking franchise based in Africa with a representative office in London, said for more Foreign Exchange inflow, the country must meet its OPEC quota of oil production.

“We need to know if we are producing the quota that is expected of us by OPEC and the reason we are not meeting the quota is not far fetched. It’s because of vandalism, oil theft and all of that. The government is doing a lot to mitigate that but they need to step up their game. Nigerians are no longer interested in too much rhetorics, this is the time for action,” he stated.

He further advocated that commercial banks hoarding the Forex should be sanctioned why other operators should be reign into line because their activities are currently affecting the economy.

“Currently, why we have huge disparity between the Naira and dollar is not far fetched. Before, we used to have multiple exchange rates, whereby, the FG has a particular pegged rate, which is the official rate and we also have two other windows where we have different rates, but now, we have a unified exchange rate regime which level up everything and as a result of that people are able to speculate and that’s basically why the disparity is huge.

“Basically, a lot of hoarding is going on in the market now. Ordinarily, what determines the exchange rate of two currencies is the balance of trade of that country. The difference between import and export. That two indices determine how strong a country local currency will be. For instance, if your export is higher than your import then it means you are earning more foreign currencies than you are demanding.

“The forces of demand and supply between import and supply will determine that but as it is, we know the country is more of an import dependent economy than an export oriented economy. That’s a factor, but majorly what we are seeing now is artificial pricing, which is largely due to the fact that people are hoarding and speculating about the currency and that’s responsible for the current economic crisis,” he stated.

Explaining the way out of the current rise in FX in the country, Sowunmi, advised that the President should parley the CBN, the minister of Finance and other key stakeholders in the foreign exchange system.

He also said the government should ensure that oil theft, vandalism and others are stopped in other to increase the nation’s daily oil output.

“The government should show more of political will, since the disparity or rate we are seeing is not largely backed by fundamentals but speculation then government need to show more of political will by calling for a round table discussion with key stakeholders in that market. Government needs to have a round table discussion with them because they are Nigerians and to them they are doing their business but that business is harming the economy.

“So, government needs to sit-down with them because when the country was using the multiple exchange rate regime government was using the Bureau De Change (BDC), operators to push dollars into circulation but now, they have reversed that and are currently using the banks. What we are seeing now with the banks is currency racketeering within the banking sector as well.

“Government need to sit down with CBN, the Minister of Finance and key stakeholders in the financial system to set the policy right. The government should sit with stakeholders in the financial sector and set the policy right and on the supply side, we need to see how we will increase our daily oil output because our oil revenue constitute higher portion of our FX revenue.