The solution to the lingering foreign exchange (forex) crisis is not a one-size fit all approach nor the job of one entity, but an aggregate of individual activities.

The President of Chartered Institute of Bankers of Nigeria (CIBN), Prof. Segun Afolabi, said that interaction between business management and the exchange rate is very profound especially in developing economies like Nigeria where heavy reliance on imported basic necessities of life is the order of the day.

Speaking at the institute’s breakfast session in Lagos, he said Nigeria has become notorious for importation of an array of items covering consumer durable and non-durables; heavy industrial plant and machinery, and even manpower and technology.

Consequently, most businesses operating in the country depend on a friendly exchange rate regime to survive and/or operate profitably, but not without demand pressure on the reserves.

In an exclusive chat with The Guardian, he said that as good as the new forex policy might be, if we cannot begin to depend on what we can do for ourselves and diversify the economy in real terms, it would pale into insignificance.

For him, from the peasant farmer in the rural areas to the experts in the urban areas, there must be a deliberate contribution towards relieving the country of the heavy burden of dependence on foreign items and crude oil.

However, he said the challenges inherent in the structure of our economy begin with the near impossibility of the market system to ensure efficient distributive system through the forces of demand and supply.

“From the labor market to financial market down to the commodity market, governments often have genuine political reasons to intervene, usually to seek the greater good of the greater number.

“Foreign exchange as a commodity is not insulated from this intervention. Indeed, from the pre industrial revolution to this present age, the global search for a workable, efficient and fair exchange rate regime continues unabated.

“Nigeria is known to have tried almost every conceivable foreign exchange allocative system and the search for a more acceptable system still continues.

Our own situation is this complex because when wages are indexed to dollar, about 70% of Nigerians are said to be living on less than two dollars a day. The prevalence of poverty is therefore, a daunting challenge to a government that is desirous to promote economic welfare,” he said.

The don noted that the flexible exchange rate is therefore, another attempt at finding a workable exchange rate regime in Nigeria and for Nigerians.

“The underlying facts are well known. In a situation where there are supply rigidities, attempts to administratively regulate prices promote black marketeering. Herein lies the challenge of the Authorities. Should Naira be allowed to float freely? Some have argued that pegging the exchange rate at about N270 to a dollar is equally unrealistic,” he said.

As part of solutions, he advocated that businesses must now redefine their dynamics- focus, move away from import dependent technology and substitute imported raw materials for local ones.

“Consumers need to buy into the new dynamics and tame their insatiable appetite for imported commodities. Government should provide more incentives for businesses that succeed in their quest for import substitution and export promotion,” he added.