Sam Olofin, a former member of the Monetary Policy Committee of the Central Bank of Nigeria, has said the naira must be rescued from the hands of “powerful operators” in the parallel market, which he described as a “monster”.
Olofin, a professor of economics, said this at the 2024 public lecture of the Nigerian Economic Society, themed ‘Recent Developments in the Nigerian Foreign Exchange Market: Issues, Options, and the Way Forward,’ on Thursday in Ibadan, Oyo State.
Read also: CBN slashes Customs duty rate by 7.3% as naira strengthens
“As we speak the naira value against major foreign currencies, especially the dollar, has continued its free fall and stands at over N1,500 to a dollar. Our attention should be focused on this powerful segment of the market, the so-called parallel or black market. We have succeeded either deliberately or unwittingly in creating a monster that has been well-protected,” Olofin said.
“It is either we bring this monster under control or allow it to strangulate the naira. As things stand at the moment merely wishing that the ‘willing buyer and willing seller’ model would do the job would be a mere fantasy,” he said.
If the naira must be saved from imminent collapse, the time has come to rescue it from “the hands of these powerful operators in the foreign exchange market”, according to him.
He urged the federal government and other key economic stakeholders to intervene urgently to prevent the collapse of the naira.
“The immediate issue of concern in the near and immediate future as to the way forward should be on how to put a halt to this free fall, stabilise the value of the naira and ensure the effective operation of the foreign exchange market,” Olofin said.
Nigeria’s fragile economy is plagued with high inflation and rising poverty, heightened by the removal of petrol subsidies and the devaluation of the naira.
The naira has lost nearly 70 percent of its value since the shift to a more liberalised foreign exchange market last June, making it one of the worst-performing currencies globally.
In January, the naira lost 21 percent, touching a record low of N1,530/$. This is largely because of the lingering disequilibrium in the forex market as dollar demand continues to outpace supply.
Adeola Adenikinj, president of the NES, said the choice of the theme is apt as it is perhaps the most important issue in Nigeria today.
He said: “The government, especially the CBN, has reacted to the sharp and persistent devaluation of the naira with a rash of circular policies. At times, we worry that the effects of a particular policy have not been assessed before others are quickly thrown into the mix. This action tends to add to uncertainty and the flight to safety postures of economic agents, who continue to hold dollars outside the banking system.
Read also: GDP growth hits 3-year low on naira crises, subsidy removal
“At times, we worry that the effects of a particular policy have not been assessed before others are quickly thrown into the mix. This action tends to add to uncertainty and the flight to safety postures of economic agents, who continue to hold dollars outside the banking system.”
Usman Opanachi, head of the Department of Monetary Policy at the central bank, representing Governor Olayemi Cardoso, said the management of the apex bank is doing everything possible to ensure that the naira is strengthened.
“Anytime naira is on trial, the CBN is also on trial,” Opanachi said.
