The Governor of the Central Bank of Nigeria (CBN) Godwin Emefiele, has been told to allow the foreign exchange rate reflect the reality of the country’s market, as Vice President, Yemi Osinbajo, labelled the current rate artificial.
On Monday, the forex market closed at N414.40 to $1 on the Investors & Exporters FX window, which is the officially recognised rate market of the CBN, while at the parallel market, one dollar closed around N560.
Osinbajo who spoke at the ministerial retreat held in Abuja on Monday, said the official rate is artificially low and Emefiele needs to address it, as investors won’t be encouraged to invest their money in Nigeria, and as such, affect Nigeria’s foreign reserves.
He said CBN needs to rethink its demand management strategy for the forex, to avoid deterring investors from bringing FX in, “As for the exchange rate, I think we need to move our rates to [be] as reflective of the market as possible. This, in my own respective view, is the only way to improve supply.
“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 that when the CBN governor has time to address, he will be able to address in full.” Osinbajo stated at the midterm retreat of President Muhammadu Buhari’s second tenure.
Competition between CBN and Ministries
Osinbajo in his statement, said the CBN is overlapping its duties with its intervention programmes for the small and medium enterprises, which is meant to be the responsibility of the Ministry of Industry, Trade and Investment.
He noted both the fiscal and monetary authorities are in competition, and the apex bank shouldn’t be making financial intervention programmes for SMEs without the knowledge of the Trade Minister.
The VP stated that the lack of cooperation results to some individuals benefiting more than once from the intervention programmes because both the Ministry and the CBN carry out their interventions separately.
“There must be synergy between the fiscal and the monetary authority. We must be able to deal with the synergy, we must handle the synergy between the monetary authority, the CBN, and the fiscal side.
“Sometimes, it appears that there is competition, especially on the fiscal side. If you look at some of the interventions, you will find that those interventions are interventions that should be managed by ministries.
“The ministry of industry, trade and investment should handle MSMEs interventions, and we 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 and consent of the ministry of industry.
“Sometimes you will get people who are benefiting more than once because we simply have no line of sight on what is going on, on one side.” Osinbajo said.
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