NECA counsels Nigerian govt on how to reduce forex pressure 

The Nigeria Employers’ Consultative Association {NECA}, on Wednesday, counseled the Federal Government on the need to ramp up crude oil production to the 1.8 million barrel per day OPEC quota for the country.

According to the umbrella body of employers in the country, this is a critical factor to reducing the demand pressure in the forex market and associated economic challenges.

NECA also called on the government to pursue and eliminate crude oil theft and resume domestic refining to save forex for other productive uses.

In a statement titled Ramping–up FOREX Revenue, Crude Production and Non-Oil Exports – Urgent Imperative for Economic Recovery, NECA’s Director-General, Adewale-Smatt Oyerinde, said: “The unification of exchange rate policy was supposed to bring into convergence the exchange rates at the official forex market and the parallel market windows. At the beginning of implementation, the policy appeared to have gained traction but has now progressively become undesirable. While the official exchange rate stood at about N781.64/US, the parallel market around N900/$ as noted by the Central Bank of Nigeria (CBN), the differential of which shows a premium of about 21 percent between the two windows.

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“As observed by the CBN, illegal remittances through inappropriate channels and unlawful selling of dollars by commercial banks are the core reasons the Naira value has continued to degenerate. While agreeing with the apex bank, we want to add that the continuous existence of the parallel market, particularly in open places, is more than culpable for the ugly development. We believe that as long as the “black market” with the institutionalised name, “parallel market” persists, unruly banks in the country will continue to round-trip, notwithstanding the implication on the economy.

“The persistent wrong channeling and mismanagement of forex on organised businesses has become agonising. Business working capital, production, capacity utilisation, investment, sales, etc., have contracted significantly, while firms are forced to downsize. The gray trajectory portends tragedy for the economy if not quickly addressed. Consequently, a more stringent action that will significantly reduce the influence of economic saboteurs in the forex value chain must be implemented. We believe that if the Parallel market is not legal, then it is illegal and should be treated as such.

“In order to reduce the pressure of forex and other economic challenges associated with it, we urge the government, as a matter of urgency, to ramp up the production of crude oil to at least the 1.8 million barrel per day OPEC quota for the country; pursue and eliminate crude oil theft; resume domestic refining to save forex for other productive uses; and be fiscally disciplined in terms of dollar dealings. These measures will no doubt, avail more forex to CBN for onward intervention in the official forex market, which will enable businesses to source forex to sustain business activities.”

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