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Expert urges CBN to abolish multiple exchange rates


Lukman Otunuga

A financial expert and research analyst with ForexTime (FXTM), Lukman Otunuga, has urged the Central Bank of Nigeria (CBN) to do all it could to abolish the multiple exchange rate, saying it is currently coming closer to cutting interest rate with the positive development in the economy.

Otunuga said for Nigeria to achieve its goal on the ease of doing business, there is need for government to fix infrastructure and reduce the volatility of it multiple exchange rate.Otunuga in an interview expressed optimism in the Nigeria economy saying a lot has changed in the economy since February 2017, courtesy of intervention by the Central Bank of Nigeria (CBN).

In his words: “Our over dependence on oil caused the recession in 2016 when the oil price started depreciating but things are looking brighter, economic growth on the third quarter was 1.4 per cent, inflation is stabilising, in October inflation was 15.9 per cent.

“Last year what caused the inflation to skyrocket beyond control was cost raised inflation when the naira was depreciating, we saw trading into N511. But now with the introduction of forex, we can see increase in dollar liquidity, we see inflation stabilising,” he said. He urged the apex bank to do all it could to abolish the multiple exchange rate, saying it is currently coming closer to cutting interest rate with the positive development in the economy.

“At the same time the central bank of Nigeria has kept the interest rate at 40 per cent for an extended period of time. I believe as the economic fundamentals in Nigeria continues to increase this could provide permission for the central bank of Nigeria to move forward 12 per cent and probably 10 per cent in growth,” he stated.

According to him, Nigeria’s ease of doing business is gradually growing and quite improving but there is need for government to fix its infrastructure. Nigeria has weak infrastructure. For example power generation is very bad in Nigeria, if Nigeria can work to have stable electricity that would improve the ease of doing business. Fixing roads and exchange rate would ease

Speaking on the 2018 budget of consolidation, for the 2018 budget to be achievable, the government need not do the same mistake in 2017. We need to look closer on oil because as much as we don’t want to say it, there is still a touchable reliance on oil. Looking at the 2017 budget, there is an optimism with the oil price production, if the government moves with the same direction in 2018 could another story.

For Nigeria to achieve productivity in its dealings, Otunuga said it requires the change of mind from the people in the country. With the population rising to 190 million people, which is more than half the population of West Africa. Agriculture only accounts for 20 per cent of Nigeria’s GDP.

“It has the ability to have 60 per cent of the working population. I believe government should move forward to invest in agriculture in which the youth can work in which will fix the high unemployment rate in Nigeria. With agriculture increasing it will build Nigeria a strong foundation. If Nigeria can start producing its own food and consuming it, not only will it feed its population, it will increase the economic growth, the surplus could be exported,” he said.

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