The Federal Governments exchange rate policy is unsustainable and a threat to Nigeria’s macro-economic stability , says Atedo Peterside Chairman of Stanbic IBTC Holdings Plc.
Peterside who delivered the welcome address at the Standard Bank Seventh West Africa Investors’ Conference that began today(Tues, Feb 23) said:
“The greatest policy uncertainty of all remains and that is an exchange rate policy regime that threatens the foundations of macroeconomic stability and appears to be unsustainable. The argument at stake is not whether to devalue or not because there has already been an effective devaluation. ”
Peterside also said the pursuit of scarce forex for today’s needs by companies has become the main game in town and this has exacerbated the pressures on Nigeria’s foreign exchange reserves and the Naira via the one-way bet that is currently on against the currency.
The central bank’s efforts to all but fix the naira against the dollar for the past year by restricting foreign-currency trading by banks has caused a shortage of dollars, hampering companies from expanding or accessing imports.
Parallel market rates for the dollar hit N400 per $1 last Friday as importers scrambled for the greenback.
Growth is estimated to have slowed to 3 percent last year, the lowest since 1999, according to Nigerian Bureau of Statistics (NBS).
Peterside observed that naira prices of various capital goods are being “correctly” priced purely on the basis of realistic expected replacement costs.
“The economy is sliding towards an unpalatable scenario where the consumer suffers the “pains” of devaluation (rising prices) without witnessing any of the expected “gains” such as enhanced fiscal viability (in local currency terms at least) of the three tiers of Government and increased competitiveness of Nigerian businesses,” Peterside said.