NIGERIA'S CURRENCY PROBLEM HAS SOLUTIONS PROPOSED BY EXPERTS

Economic experts have advised that the only way out is a complete economic restructuring away from a mono-cultural economy to a more diversified economy as currency rate pressures persisted in the Nigerian foreign exchange market through last week.

The Naira averaged N430 to one US dollar over weekend, compared to N429 at the start of trade on Monday in the Investors and Exporters window.

The local currency slightly declined on the black market, closing at N682/USD1 as opposed to N680/USD1 on Monday.

The second week of August saw the exchange rate reach an all-time high of N720/USD1.0, which caused the National Assembly to call the Central Bank of Nigeria, CBN, before it for an explanation.

However, the majority of economic experts were concerned that lawmakers were looking for a scapegoat rather than addressing the economic and fiscal issues that have damaged the country and its currency over the years.

Professor Ken Ife, a development consultant and the lead consultant for industry and private sector development at the ECOWAS Commission, said the problems with the volatility in the foreign exchange market are more due to structural and fiscal imbalances than problems with monetary policy at a seminar for financial journalists last weekend.

According to him, inflation and currency rates are more unpredictable than interest rates when it comes to price stability.

Insecurity, borrowing, a lack of infrastructure, and other structural factors, he said, “play more of a significant role in driving inflation than money supply in Nigeria at the moment,” and he added that “exogenic forces on oil/gas price and production, foreign exchange demand pressure, import appetite, speculation, insecurity, and insecurity play a significant role in driving foreign exchange rates.”

In suggesting remedies, he noted that the CBN must utilize domestic financial intervention to restrain these dynamics and invest in infrastructure to broaden the economy and wean it from its monocultural reliance on oil and gas as the primary source of foreign cash. The transmission and effectiveness of monetary policy instruments are both constrained by numerous structural constraints.

In addition, he repeatedly emphasized the part that governance problems played in the never-ending interventions in virtually every sector, saying, I don't believe there are governance issues in the domestic finance intervention from the standpoint of the CBN. Because of the uncertainty and structural issues at play, the CBN has emphasized, and properly so, investments in infrastructure, economic development, diversification, and employment, and selects an appropriate mix or blend of monetary policies to support these, not the other way around.

Dr. Biodun Adedipe, Chief Consultant at the management and financial consulting firm B. Adedipe Associates, also spoke and emphasized the necessity for Nigeria to revamp its economic and governance system completely in order to stop the tide of exchange rate and price instability.

He specifically urged action on the overemphasized need to shift the country's economic basis away from the oil sector and toward the real sector.

presenting the available options The basis of policies, programs, and projects, according to Adedipe, is the governance system, which must be reformed and rationalized. The structure is complex and expensive. Reduce the number of ministries, departments, and organizations; Remove overlaps; Realign roles; Establish clear and concise KPIs for Ministries, Departments, and Agencies; ensure responsibility from the highest leadership, particularly Directors and above.