Waiting for the new rules to do the magic: “The government aims to expand the official market to include all legitimate transactions while cracking down on the illicit parallel market for foreign currency. The government sees a “fair price” for the dollar at N650 to N750. Currently, the official exchange rate is around N800 per dollar.”
Nigeria is planning to introduce new foreign exchange rules to reduce the gap between the official and parallel market rates for the naira, according to Bloomberg.
As part of the move, the government hopes to close the more than 45% gap by year-end, according to Taiwo Oyedele, chair of the presidential committee on fiscal policy and tax reforms. This means clearing a backlog of dollar demand, bolstering the naira forward market, and setting transparent rules for the official market’s operation.
‘…according to the sector operators, the cost of exporting 100 tons of cargo in Nigeria is $35,000, compared to $4,000 in Ghana…. “Today, the leading ports for West Africa are in Cote d’Ivoire, Ghana, Togo, and Benin Republic. All these countries have modernised their port management systems, leaving Nigeria far behind’ – Akinwunmi Adesina, African Development Bank President/ AriseTV.
The Port of Lome is the busiest port in West Africa now because most Nigerian importers prefer it over the decades-old ones in Nigeria; Togo has a population of about 9.3 million people, to Nigeria’s 220 million. So, as we work on the new rules, we have to pay attention to things which continue to hurt the Naira.
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Yes, Nigeria has run down most anchors of industrialization and export services to the ground , and that is why this Naira FX fight should not be left for the central bankers. Simply, we have lost grounds on many dimensions of regional comparative advantages, making things exceedingly tough for businesses to export and improve Nigeria’s balance of trade and payment. Left or right, we must reverse those steps in order to advance the economy, and then help the Naira to compete globally in the league of currencies.
We are the architect of our problems. Imagine the other countries mentioned, it is not that we cannot do better than them but we choose to be doing it the wrong way because those positions find joy in our sufferings.
— Atuks (@_atuks) October 31, 2023
Nigeria to Introduce New Rules Before December to Close FX Gaps
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Was Nigeria configured to ever function positively and optimally? It just feels like everything about this country was fraudulently setup to fail.
Where else do you find a country that desperately needs productivity to skyrocket but does everything possible to undermine hardwork and enterprise? The very things that build the productive capabilities are the most antagonized of them all. How many ports are serving a population of 220 million people and what is the maximum capacity of these ports? The money we wasted on largely unproductive railway projects could have given us a big seaport in Akwa Ibom, but we are never thoughtful anyway.
What is the experience of using our international airports both for incoming and outgoing users? Do customs still extort both importers and exporters? How seamless is it to set up a manufacturing facility and aim for export? What kind of experience do our people who dared to make things here have? We cannot be sources of miseries and frustration to the very people who want to get things done and at the same to wanting to fix naira via theoretical policies.
Why are we this wicked and thoughtless to ourselves? It’s unbelievable that we don’t even want to compete against other countries.