Nigerians and investors have been reassured by President Bola Tinubu that there is an ongoing initiative to increase the nation’s foreign exchange liquidity.
The country was expecting inflows of roughly $10 billion in the near future, according to Wale Edun, Minister of Finance and Coordinating Minister of the Economy, which would help to clear foreign exchange backlog and stabilise the naira.
Speaking on Monday at the 29th Nigerian Economic Summit in Abuja, Tinubu acknowledged the difficulties the business community was having in the financial markets and gave them the assurance of more foreign exchange liquidity to regain market confidence.
He also emphasised the administration’s commitment to improving governance by building a culture and structure in the public and civil service that is focused on performance and results.
The President listed the eight top priorities of his government, which are: eradicating poverty; ensuring food security; fostering economic growth and job creation; facilitating access to finance; ensuring inclusivity; security; and combating corruption.
The N5 billion intervention to boost small enterprises and the agricultural sector was one of the measures his government had put in place to revive the economy. He also cited planned efforts including a new student loan programme and consumer credit schemes.
Tinubu invited the private sector to contribute their ideas, leadership, resources, and collective resolve to help create a future of renewed hope in order to support his vision for a bigger Nigeria.
The President declared that he was prepared to keep his word to Nigerians and invited the corporate sector to help him in this effort.
The president declared that “all foreign exchange future contracts will be honoured by this government” in response to the clearing of the FX backlog that has eroded investor confidence.
“I can guarantee you that we have access to the foreign currency we require to refloat this economy. And we’ll get it, he continued.
The chairman of the National Economic Summit Group, Mr. Niyi Yusuf, stated in his remarks that if a low-growth and low-investment age persists, there may be increased dangers of stagnation and hardship due to Nigeria’s more than 133 million multidimensionally poor citizens.
The low availability and rising cost of foreign exchange, the high cost of inventories, imported inputs, and operations, as well as the variety of taxes, he continued, continue to erode firm balance sheets, leading to a decline in output and employment.
He stated that the nation is at a turning moment in its history and that the problems facing the people demand quick, coordinated actions. He also emphasised the necessity for all parties to act right now with a feeling of urgency.
According to Yusuf, the country requires a macroeconomic stability project that is backed by an aggressively expanded national security operation to stop all types of organised and gang-related crime centred around solid minerals and crude oil, as well as a made-in-Nigeria agenda.
A national job development plan that promotes the creation of a significant number of high-quality jobs is also required, in addition to other reforms.
He declared, “This year’s summit has been designed as a burning platform to address the issue of the fundamental economic transformation pillars that would lead us to the future the government has in mind.
“The requirement for quick strategic changes that have an influence on the cost and ease of conducting business within a short amount of time poses an existential danger to businesses and entrepreneurs.
“The conference will have discourse on the low access to and rising cost of foreign exchange, high cost of inventory, imported inputs, and operations, coupled with the diversity of taxes, continue to erode business balance sheets, with resultant contraction in production, and employment.”
Yusuf continued by saying that whereas medium, small, and micro-enterprises struggle with multidimensional complexity, major corporations are fighting low capacity utilisation. He stated that the deteriorating social conditions brought on by these dismal economic outcomes cannot be taken for granted.
FG targets $10 billion
Mr. Wale Edun, the minister of finance and economic coordination, has said that inflows of foreign currency of about $10 billion are anticipated in the coming weeks rather than months.
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During a panel discussion at the present Nigeria Economic Summit, Edun made this statement.
Additionally, he added, “There is a line of sight of $10 billion worth of foreign exchange in the relatively near future, in weeks as opposed to months, from the supply of foreign exchange through NNPC, increased production, reduced expenditure, from transactions like forward sales, from our discussions with sovereign wealth funds, that are ready to invest and provide advanced alongside that investment.”
The Minister also revealed that two executive orders aimed at ensuring currency market liquidity have been signed by the President.
He remarked, “Mr. President declared that he has taken efforts to ease the FX market’s illiquidity, which we know is highly troublesome at this moment.
“There is a lack of supply, which has a number of causes, and as a result the market is illiquid and not operating as it should. The President has offered an executive order that basically permits all of the cash in the domestic economy to enter the formal money supply legally under a period of forbearance as a solution.
There is also another presidential order that permits domestic issuance of foreign currency instruments in order to give people an incentive to supply foreign money from any source.
The Federal Government also has plans to automate all foreign exchange market transactions in the near future in order to curb wide arbitrage and punish naira speculators.
Edun claims that all FX market transactions, from official to money changers, where significant arbitrage has frequently taken place, will be closely scrutinised, and violators will be identified and disciplined.
He acknowledged that the lack of liquidity on Nigeria’s foreign exchange market prevents it from operating efficiently, and that the government is ready to take whatever necessary steps to alter the current situation.
The foreign exchange market will be streamlined and reformatted so that all legal and proper transactions will fall within the jurisdiction of the government and in the official foreign exchange market. Anything outside of that will be illegal, a crime, and punished, according to Edun.
Yemi Cardoso, Governor of the Central Bank of Nigeria, stated in his remarks that the top bank will take its goal of price stability “very seriously indeed” moving forward.
The governor promised, “We are going to publish a beautiful document that will lay out the rules for you.”
Additionally, it was revealed that the apex bank is drafting a paper that will explicitly lay out the regulations governing the foreign exchange market.
He stated that the goal of the central bank in Nigeria is to create a market that is “predictable and without flip-flops.”
He continued by saying that although efforts to harmonise the foreign exchange market were not entirely successful, more money was brought into the nation as a result.
The governor added that he anticipated foreign portfolio investors will increase their foreign investment.
“We will see the result in due course,” he continued. More difficult choices still need to be made, but two really difficult ones have already been made. Now we only need to manage things to reach where we want to go. And that’s where we want to be, with set FX that serves a certain purpose. A FX that is effective for everyone. a forex market with established regulations. a foreign exchange market with constant policy stability. a forex market you can forecast. What we do is that.
“We will release something that is emblematic of the genuine market,” he continued, “because the market will eventually adjust to some of these things. I’m glad to be honest.
We have a tonne of interest from international portfolio investors and pips stakeholders who are genuinely eager in keeping up contact with Nigeria. They understand where this is all leading, which is of course the reason. I just want to emphasise that moving forward, you’re going to find a Central Bank that takes its goal of price stability very seriously indeed,” he continued.
The Federal Government also intends to increase the number of “legitimate” participants in the official currency market, such as money changers and financial technology firms.
At the economic conference, Taiwo Oyedele, the chairman of the presidential committee on fiscal policy and tax reforms, stated as much.
He declared, “Our market is currently ineffective and will not continue to be so in its existing shape.
Even when you combine the parallel and formal markets, there isn’t enough liquidity.
suffering Naira
According to research by The PUNCH, the naira continued to depreciate on Monday at both the parallel and official markets as the FX crisis persisted despite the Federal Government’s assurances.
The PUNCH met with Bureau de Change employees who said that the naira was bought for 1,210 and sold at 1,235 from 1,190 on Friday.
The naira closed at 793.34/$ on Monday at the official market on the Investor & Exporter forex window, down from 783.64/$ on Friday.
Jubril Mutiu, a BDC operator, stated today (Monday), “We bought the dollar for N1,210 and sold it for N1,235; we bought the euro for N1,220 and sold it for N1,235; and we bought and sold the pound sterling for N1,450 and N1,500.”
Ahmed Kareem, a different BDC operator, stated: “We sold the dollar for N1,190 on Friday, but today, it is N1,235; It is just falling.”
Mushin, who works at a bureau de change on Palm Avenue and goes by the name Edris, told The PUNCH, “I buy for N1,170/$1, but only if your dollar is nice enough. However, I’ll sell it to you for N1,210 if you want to buy from me.
Suraju Ahmed, a forex trader in Abuja, reported that the rate closed on Monday at N1,235/$.
He said, “We sold for N1,235 and bought for N1220 in Abuja on Monday.”
