By Obinna Chima
The President/Chairman of Council, Chartered Institute of Bankers of Nigeria (CIBN), Prof. Segun Ajibola has stressed the importance of an efficient foreign exchange management in Nigeria’s strive to improve on its citizens’ Human Development Index.
According to the CIBN boss, with over-reliance on imports of basic needs and export of mono-product, oil, the challenge of absolute and relative poverty remains very high in the country.
These, he pointed out exposes the nation to the vagaries of the forex market.
Ajibola said this in an address he presented at the 2017 Fellowship Investiture by the institute held in Lagos recently.
He noted that while Nigeria had experimented with different exchange rate regimes, opinions were still polarised among economic experts on the best policy option in the management of the country’s foreign exchange.
“Principally, there are two extremes of exchange rate regimes – fixed and floating – with different shades of combination. The choice of exchange rate regime depends on a country’s level of development and the policies governing the monetary and financial fundamentals of such economy.
“Most developing economies tend to adopt fixed exchange rate regimes to build confidence in their economic policies whereas the more advanced ones lean towards a flexible regime as they become more active in international financial markets.
“When Nigeria transited to what I call “a managed floating exchange rate regime” in June 2016, questions were raised on the appropriateness and timeliness of the policy,” he explained.
But Ajibola acknowledged that in the past few months, the country has witnessed some stability in the foreign exchange market especially with the interventions of the Central Bank of Nigeria in the market since February 2017.
He, however said there was need for a “religious commitment to transparency and accountability in the management of the country’s foreign exchange market by all stakeholders.”
“The macro-economic objective of exchange rate stability and equilibrium balance of payments position can be achieved if only we tame our high propensity to consume imported consumer durables and non-durables, promote non-oil exports and pursue the age-long import substitution strategies,” he added.