Despite the adoption of a flexible foreign exchange rate policy by the Central Bank of Nigeria (CBN), which overall motive is for the good of the economy, experts have advised businesses to redefine their strategies in a way that will drive the exchange rate in the country’s favour.
The experts made the call at a breakfast session on ‘Business Dynamics Under a Flexible Exchange Rate’ put together by the Chartered Institute of Bankers of Nigerian (CIBN) recently in Lagos.
The president of the Institute, Prof. Segun Ajibola declared that the search for a workable, efficient and fair exchange rate regime is bound to persist in an economy like Nigeria that relies excessively on imported basic necessities of life.
Ajibola noted that the private sector is the major driver of growth and exchange rate in the country, and pointed that businesses need to reorder their modus operandi by harnessing the country’s own resources for local and global productivity; hence strengthen the local currency.
He said: “More than before, businesses need to redefine focus, move away from import dependent technology and substitute imported raw materials for local ones. It happened before when in the 1980s and 1990s flour millers and breweries, among others, moved away from wheat technology to locally grown sorghum, corn and cassava bread, etc. “
That eventually reduced their exposure to the scarce, expensive foreign exchange. Consumers need to buy into the new dynamics and tame their insatiable appetite for imported commodities.”
He noted that although the recent policy had placed a positive impact on the economy by removing distortion, hoarding and speculation in the currency market, it comes with some negative effects for manufacturers as well as consumers at the receiving end.
The CIBN boss also urged the authority to accord the market system necessary freedom to operate as he held that there will be an efficient distributive system when the forces of demand and supply are allowed to operate unfettered.
In his remark, Managing Director/ Chief Executive Officer of Dove & Brooks group, Dr. Tunji Sohodu, noted that it is high time for Nigeria to make a triumphant entry into the world market by placing importance on the production of standard and quality products that will enable its proceeds be accepted globally.
Financial players present at the session unanimously called on government to wake up from mere announcement making and swing into action, one of which is to effectively collaborate with commercial and subsistence manufacturers to engender massive exportation of locally produced goods, to reduce poverty and gain strong control over the currency market.