Experts Say De-dollarising Economy Will Halt Naira Free Fall

Amid rising free fall of the Naira both at the official Nigerian Foreign Exchange Market (NAFEM) and the unofficial market, financial experts have called on the Central Bank of Nigeria (CBN), to de-dollarise the economy by declaring any local transactions in US dollars illegal.

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, said 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 dollar.

Adedipe said: “CBN should deal transparently with participating banks at the I&E Window. De-dollarise the economy by declaring as illegal any local transactions in US dollars (sale of assets, rent/leases, and other services, including school fees and medical bills) and ensure that government agencies stop charging local operators and entities in US 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 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 a low domestic production base are a recipe for unabated depreciation.

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

Also speaking, the chief executive officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said there is no silver bullet in the treatment of the current fate of the naira.

“These can be fresh flows from oil sales or IMF support which is also a possibility because other measures had been exhausted by the immediate management of the apex bank.”

However, the Association of Bureau De Change Operators of Nigeria (ABCON), have asked the CBN to allow BDCs to carry out online dollar operations and Point of Sale (POS) agency as part of measures to boost liquidity in the forex market and ensure exchange rate liquidity.

ABCON also urged the apex bank to give regulatory approvals to allow BDCs to have access to diaspora remittances, like receiving International Money Transfer Operators (IMTOs) proceeds.

According to a report by Nairametrics, the ABCON president, Aminu Gwadebe was quoted as saying that full participation of BDCs in the retail segment of the foreign exchange market will help achieve a stable, strong, and virile exchange rate.

Gwadabe said, ABCON recommended that the apex bank should approve its overdue request that BDCs be made agents through which over $20 billion in annual inflows from the diaspora enter the economy.

He noted that securing such regulatory approval will boost dollar liquidity and strengthen the naira.