The appointment of Dr. Olayemi Cardoso as Governor of the Central Bank has begun looking like a wise one to most people, after the Central Bank of Nigeria vowed to raise dollar supply.
Dollar scarcity over the last few years became a major problem for business owners, manufacturers and even the government.
Is the CBN’s action plan on dollar sustainable and realistic?
Since Nigeria is no longer a producing nation with goods to export, it relies largely on proceeds generated from crude oil and contributions from tax and agriculture.
The continued dollar scarcity has, however, battered the health of the economy beyond recognition.
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In an effort to provide solution to these challenges, the Central Bank of Nigeria (CBN), has vowed to raise dollar supply to ease demand pressure.
There are different opinions trailing this decision.
For the Lagos Chamber of Commerce and Industry (LCCI) the CBN is doing well.
It commends the CBN’s decision to raise dollar supply to meet the demand pressure.
LCCI President, Michael Olawale-Cole, viewed this as a well-thought-out approach towards resolving the FX challenge.
“Once this plan is activated many businesses that have hitherto been exiled or gone moribund, as a result of FX challenge, can now live again.”
According to him, the CBN’s plan to clear backlog of Forex, is a testament of her commitment to reviving the economy.
He said: “This policy change is expected to reduce the demand pressure on the parallel market and ensure a gradual convergence in FX market rates.
“The LCCI particularly appreciates this stand to promote orderliness and professional conduct by all market participants to ensure market forces determined exchange rates on a willing-buyer-willing-seller principle.”
Clearing Backlogs
He added that over the years, they had consistently expressed concerns about the restrictions in the FX market and its consequences on the divergence of the rates.
Olawale-Cole said the policy was a market-friendly. He believes it will unify the exchange rates and curtail inflationary pressures.
To clear the short to medium-term backlog, he recommends that the apex bank adopts creative financing options.
Also, he suggests the establishing of a mechanism to address FX unification under the current system.
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“The authorities must pursue the right monetary policy reforms to improve the investment climate and boost investor confidence.
“We call on the CBN to ensure transparency and accountability in banks’ FX dealings at the investors and exporters windows,” he said.
Meanwhile, the apex bank recently removed restrictions on 43 items previously banned items.
