Average Nigerian can feed on N500, naira still strong – former CIBN chairman
Former Chartered Institute of Bankers of Nigeria President Professor Segun Ajibola said the naira is still strong in the Nigerian economy, adding that an average Nigerian can still feed himself on N500.
The Babcock University economics professor spoke on the NTA’s “Good Morning Nigeria” breakfast show on Wednesday, watched by The punch.
Ajibola said: “The national currency is a reflection of the state of any economy. It summarizes the strengths and weaknesses of this economy.
“Over the years, we have seen (a) drop in the value of our national currency. In the 70s and 80s, almost $ 2 / N1, today we are talking about more than N500 (per dollar).
He said despite the downward trend: “Our naira is still very strong locally. With N500 the average Nigerian can still feed themselves today but when you look at N500 in terms of dollar or pound equivalent, you can’t do anything with a pound on the street in London, you can’t buy anything from significant with a dollar in the street of New York.
“Therefore, there is (a) a mismatch between what the actual value of our naira commands in Nigeria vis-à-vis outside.
“In economic jargon, we talk about purchasing power parity, what is the real value of money compared to the value of currencies outside this jurisdiction? We find that our local currency, the naira, is still able to gain some value inside the country, but outside the country we have a problem. ”
For weeks, the naira had maintained its downtrend, selling over N / $ 500 on the black market while the naira traded around N / $ 412 at the I&E forex window which is the only official rate. recognized by the Central Bank of Nigeria.
Concerned, the CBN in July stopped selling currency to Bureau de Change operators and asked legitimate travelers to turn to banks for cheap currency, but banks were inundated with bogus requests.
CBN Governor Godwin Emefiele said the BDCs had beaten their existence goal of providing foreign exchange to retail users and had become wholesale and illegal resellers.
In addition, Emefiele said last Friday that the federal government would follow the owner of Aboki FX, an online platform that collects and displays parallel market rates in Nigeria, and halt the website’s operations in the country.
The governor of the apex bank also accused the owner of the website, a Nigerian based in London, Oniwinde Adedotun, of “speculative activity on the naira”, adding that he must explain how he obtains his rates.
This is based on the rate of rise of the naira on the parallel market which is currently trading above 570 N / dollar.
Aboxi FX subsequently said it would no longer provide daily exchange rate updates for the time being and hoped the naira would stabilize.
Speaking about the activities of speculators on the naira, the former CIBN chairman said speculation was common in all markets.
“The problem today is that our currency, the naira, is the subject of speculation here and there, and you have speculation in any type of market when there is a dichotomy between supply and demand, ”he said.
Ajibola said the black market was born because the official market is unable to meet Nigerians’ forex demands.
According to him, the demand for the naira has increased because the appetite of Nigerians to consume “everything imported is insatiable”.
He said: “Speculation is as old as humanity … We will always have speculators because the demand is even immeasurable.” He, however, urged the CBN to work and earn the trust of Nigerians and make citizens believe the rate of the umbrella bank – the forex I&E window – more than the speculators.
“There is no authority that can meet this kind of demand for the dollar, but the authority has the power, has the firepower to mitigate the impact of speculators.
“So the disconnect we have now is this: as a country we have not been able to control the activities of speculators so that currency users look to speculators for what is likely to happen. ‘be the rate in effect at all times. compared to what should be the case; where the authority (CBN) should be trusted more and users look to the authority to know the value, the exchange rate of the naira at any time, ”said the former president of CIBN.
Ajibola further lamented that although Nigeria imports so much, the little produced in the country is not acceptable on the international market.
The grant urged the federal government to boost non-oil exports by providing incentives and an enabling environment for the manufacturing and agricultural sectors, noting that the appreciation of the naira against the dollar could be achieved through a vibrant export industry.