The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), has proposed a multi-pronged approach to tackling Nigeria’s current struggles with naira depreciation and inflation
In a letter to key government officials, Dele Oye, the national president of NACCIMA, proposed short, medium, and long-term measures to strengthen the naira and revive the economy.
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“It is our hope that you and your team can consider the ideas espoused here, and by implementing them, achieve significant progress in stemming the ugly tide of currency depreciation that currently bedevils the nation,” Oye said.
The NACCIMA boss highlighted the enforcement of currency regulations, transparent communication, official transactions, remittance oversight, as well as monitoring and compliance as short-term measures in tackling the challenges.
“The Central Bank of Nigeria (CBN) should immediately announce the pegging of the naira to between 750 and 850 to the US dollar effective from March 21, 2024, and enforce stricter regulations on currency transactions.
“This includes hefty fines, prosecution of breach of laws, and confiscation of funds involved in transactions that violate a specified exchange rate band, such as the 15 percent maximum difference from the official rate.
“The government should consistently communicate its policy intentions and economic measures to the public to strengthen confidence in the nation’s economic management.
“All government agencies, at every level, should be mandated to conduct their transactions at the official rate, and severe penalties should be imposed for violations. On no account should government money go to the parallel market, directly or indirectly (through its contractors or government agents) without a certificate issued by the CBN or the Independent Emergency Economic Intelligence Committee.
For the medium-term measures, Oye advocated financial literacy and inclusion, investment in infrastructure, support for small and medium enterprises and inflation targeting, among others.
According to him, there is a need to “invest in and promote non-oil sectors to increase exports and reduce reliance on oil revenues. Sectors such as agriculture, manufacturing, and services should be the focus of targeted policy support.
“Enhance financial literacy to encourage the use of official financial channels and discourage reliance on the parallel market.
“Invest in infrastructure to reduce the cost of doing business and make Nigerian exports more competitive, provide incentives and easier access to finance for SMEs to boost local production and exports and implement a clear inflation targeting framework to guide monetary policy, aimed at achieving price stability.”
He spoke further: “All government MDAs currently using the undervalued parallel market rate must immediately revert to the CBN-determined rate of N800-850 for their dollar-denominated transactions, such as for payment of customs duties, etc. This will act as a major signpost that the government is serious about its decision to rein in and defend the naira. The CBN must continue to defend the naira in policies, words and action (money)”.
On long-term strategies, Oye noted that the CBN should “maintain consistency in economic policies to foster a stable environment for investment and economic planning.
“Build the capacity of economic institutions to effectively regulate and supervise the financial sector and enforce laws against economic sabotage.
“Undertake structural reforms to improve the business environment, such as streamlining business registration, enforcing contracts, and simplifying tax systems.
“Invest in education and healthcare to improve labour productivity and the innovation potential, and work towards increasing foreign reserves to buffer against external shocks, which can be achieved by improving trade balances and attracting foreign investment.”
