Nigeria’s foreign exchange market (FX), through the Investors and Exporters (I&E) window has recorded a significant growth as the average daily dollar turnover rose over $200 million, up from $40 million in April 2020, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) said on Tuesday.
Though FX pressures persist, the naira, he said, has remained stable around N411/US$1 at the I&E window, especially following the discontinuation of foreign exchange allocation to Bureau De Change (BDCs).
Emefiele spoke in Lagos at the 2021 annual Bankers’ Committee retreat with the theme, ‘Building resilience for economic growth’.
On July 28, the CBN stopped selling hard currency to the BDC operators. New BDC licences were also suspended and the CBN instead channelled the sale of foreign exchange for legitimate needs only to commercial banks.
Such legitimate needs include Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees and medicals.
Nigeria’s external reserves rose to over $41.5billion in October 2021, supported by demand management measures, the Eurobond inflow of $4bn and the International Monetary Fund (IMF)’s Special Drawing Rights (SDR).
In the balance of payments, Emefiele said the current account balance (CAB) position improved from a huge deficit of 4.53 percent of GDP in the fourth quarter of 2020 to 0.44 percent in the second quarter of 2021.
“On the back of this recovery, the CBN remains focused on strengthening the fundamentals of the Nigerian economy, by using mostly innovative and sometimes extraordinary measures to diversify the economy, boost domestic productivity, and reduce our import dependence. Though the economy is recovering, growth remains fragile, below potential,” the CBN governor said.
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He said continued implementation of efforts to boost credit to productive sectors is required to sustain the recovery, quicken growth, and improve the livelihood of Nigerians.
“With population growth at about 2.7 percent annually, it is important that we continue to deploy measures that will enable our economy to attain faster and balanced growth rates of over 5 percent on an annual basis,” he said.
The CBN recently undertook certain initiatives to build and strengthen the resilience and self-sufficiency of the Nigerian economy.
One of such initiatives is the 100 for 100 Initiative, which targeted credit of up to N5 billion to be provided to 100 firms every 100 days.
On the growth of the digital economy, he said the CBN is focused on building a robust payment system in Nigeria which is cheap, fast, efficient, and safe.
“With the growing pace of digitisation globally, we will continue to leverage digital channels in fulfilling this objective. Reflecting the confidence in our payment system, between 2015 and 2020, about $700 million has been invested in firms run by Nigerian founders,” he said.
Speaking at the retreat, Babajide Sanwo-Olu, governor of Lagos State, said, the retreat was a great opportunity to further strengthen the synergies that the apex bank and the leadership of the deposit money banks have with each and every one.
He expects that the retreat was not only strategic, but provides a platform for all of the participants to review the various monetary policies and other strategy intervention programmes that have been ongoing since last year.
“I am sure it provides an opportunity for you to further deepen what the New Year would have for all of us,” he said.
“From me, it’s also very appropriate at this junction that I commend and thank the leadership of the CBN and the bankers’ committee for the way and manner that they are addressing this challenging situation, Sanwo-Olu said.
