The National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), and other experts have advised that the federal government to as a matter of urgency put an end to the festering crude oil theft, boost oil production and boost local production and exportation.
The experts also warned that if nothing was done urgently to stem the free fall of the naira, it might fall to about N700 to a dollar and produce spiral inflation.
The experts who spoke at various for a noted that as at last weekend, the naira exchanged for as high as N590 in the parallel market, while the official rate stood at N416.23. the experts says the Naira will slide to as much as N600 to a dollar this week.
The experts say that with the 15.7% inflation rate, the Nigerian, lingering FOREX crisis would lead to a considerable increase in food prices index.
President of NACCIMA, Mr. Ide Udeagbala, said the federal government should address the oil theft question in Nigeria and fix Nigeria’s critical infrastructure to boost local production of goods, both for local consumption and export.
“The exchange rate could get to between N600 and N700 to a dollar with the way it’s going, as long as we are not exporting and we import almost everything. However, how do we talk about production when there is no electricity? The national grid collapsed twice in two weeks ago and people had to buy diesel at N700.
“So, the solution is that we must produce enough for export to earn FOREX. Crude oil theft is also an issue. If we are expected to produce two million barrels per day and today we are at 1.3 million bpd, is it difficult to know why we are here?
“The exchange rate could get to between N600 and N700 to a dollar with the way it’s going, as long as we are not exporting and we import almost everything. However, how do we talk about production when there is no electricity? The national grid collapsed twice two weeks ago and people had to buy diesel at N700.
“So, the solution is that we must produce enough for export to earn FOREX. Crude oil theft is also an issue. If we are expected to produce two million barrels per day and today we are at 1.3 million bpd, is it difficult to know why we are here?,” he asked.
In his views, the chief executive officer of Cowry Asset Management, Mr. Johnson Chukwu, noted that due partly to the low crude oil production, crude oil theft and low export of goods, naira had continued to suffer a free fall as a result of weak foreign exchange earnings.
“It’s all about how much you spend on importation compared to how much you earn from exportation. We are not producing enough so we don’t have enough resources to support the naira.
“The immediate solution is to stop crude oil theft so we can make more revenue, and the long term solution would be to diversify our economy so that we can produce more exportable commodities or produce more of what we consume to limit our importation.”
He said the Central Bank of Nigeria’s decision to suspend sale of forex to Bureau De Change, has not helped in bringing down the cost of the naira against major currencies.
The chief executive officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, said apart from addressing crude oil theft and boosting production, government should consider a flexible exchange rate policy regime, different from devaluation.
“This model would enhance liquidity in the foreign exchange market, reduce uncertainty in the FOREX market and enhance investors’ confidence. Also, it is a more transparent mechanism for FOREX allocation, it minimizes discretion in the allocation of FOREX and reduces opportunities for round-tripping and other sharp practices.”
By Chidi Ekpewerechi
Be the first to know when we publish an update
