Naira appreciation impossible without economic changes, says Gwadabe
With sustained oil dependence, parlous infrastructure, porous borders, huge importation of commodities and ongoing political tension, the naira can hardly gain 49 per cent appreciation at N184 against the dollar instantaneously, the President, Association of Bureaux De Change Operators of Nigeria, Dr. Aminu Gwadabe told The Guardian, yesterday.
Meanwhile, Google in Africa, in a twitter message, last night admitted technical glitch in its operations, which led to the inaccurate calculations of the nation’s exchange rate at N184 per dollar.
“We’re aware of an issue causing inaccurate conversions for Nigerian Naira currency. So, we will remove the conversion onebox from appearing in search results, until we are able to diagnose the issue,” the search engine said.But Gwadabe alleged sabotage and inducement of panic, as other online foreign exchange collaborators quickly shut down their sites to ensure there is no comparable alternative.
Restating structural issues that are against such positive development, he said: “Where are the fundamentals that will lead or support the 49 per cent appreciation? Ordinarily, people should not have given attention to the information, because it is impossible without significant change in economic indices.
“Nigeria is dependent economy and does not control the currency of import. So, it is difficult to strengthen the exchange rate, except through the capital control that is in place now, backed by availability of dollar through interventions. It is not by fiat and not so quick, even when the fundamentals are there.
“The refinery takeoff, expected in 2020, will help in reversing the exchange rate losses, just as the country has achieved through rice production. At least, something significant has reduced on rice importation,” the Bureaux de change operators boss said adding, “the import of petroleum is huge on reserves, which is the standard gauge of the country’s ability to finance its international transactions. When it is low, it stokes speculations that will automatically hit the local currency.
Gwadabe continued: “Another issue is surveillance, which presently is not tight. The borders are porous, giving five West African countries undue opportunities to come here to source dollar. Since they have fixed currency rate with Euro and Cefas, most of them change to Naira and convert to dollar. This is putting demand pressure on us. Stronger institutions are now more necessary than ever to nip the lapses in the bud…”
He added: “Exchange rate is directly linked with productivity, so we must support the realisation of the ‘one local government, one product’ initiative to ensure that we have enough on the aggregate to earn more.This way, our offerings in international market will increase inflow and support exchange rate.”
The bureaux de change operator noted that, “Nigeria has issues with infrastructure despite several investments claims so far, and it is important to support whatever initiative that would increase productivity, at least, to reduced importation and pressure on reserves.
The currency dealer explained that there is a resurgent confidence in the economy, except the ongoing election challenges and hoped that once it is concluded with a clear winner emerging, the investment windows will be opened wide again.”Of course, Nigeria is the investment destination and central in the mind of investors, so the international community will come up with support. Our human and resource advantages remain attractive and the outcome of the election will be strategic. We must get our acts right to turn the misfortunes of the Naira,” he added.
One of the licensed Bureau De Change operator, Auwal, affirmed that he bought CBN’s interventions, which is $20,000 per operator, at N357 per dollar, at the weekend, adding that no where has it heard that an exchange rate is cut in two in a “twinkle of an eye.””We know that there is stability in the market for a long period now. But we also know that there are fundamental issues that cannot be taken away overnight and these issues are directly linked with exchange rate. They must be solved to support Naira appreciation. It is not a magic,” he said.
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