The Managing Director (MD) of FSDH Merchant Bank, Bukola Smith, has stated the government of Nigeria must avoid policy flip-flops to restore confidence in the country’s economy with a focus on the investment market.
Speaking at the bank’s Breakfast Series, which focused on RT200 Foreign Exchange Programme, Smith believes consistency in predictable policy direction would raise the confidence of foreign investors, which is necessary to boost foreign exchange earnings.
She noted policy inconsistency had led to the drastic reduction in export earnings, a situation that had triggered a deficit in the country’s current account. She therefore challenged the government to strive to bridge the growing gap between imports and exports in the country’s commercial affairs.
The banker, thus, strongly urged the government to work extra hard to shore up the country’s dwindling external reserves towards averting a major crisis in the near future.
It’s noteworthy the gross reserves dropped to $39.04 billion on Wednesday, 11th May 2022, the last time it was updated. The figure was the lowest Year-to-Date (YTD).
Smith told the participants at the meeting that a consistent fall in the reserves was a major red signal the national economic managers could not continue to ignore.
If the RT200 scheme is properly implemented, she said, “It will help us to earn more sustainable FX, reduce exposure to volatile FX, increase export, which we need to achieve and help to diversify from oil”.
According to her, unstructured procedure, corruption and rejection of the country’s exports are some of the threats to the scheme. These, she said, must be addressed urgently as necessary steps had been taken towards making a success of the initiative.
On his part, a trade expert in the person of Bamidele Ayemibo, who gave a keynote speech at the Series, charged the government to urgently tackle the conception risk posed by over-dependence on crude as a source of FX earning.
Ayemibo picked on the height of the COVID-19 crisis in 2020 when oil prices dropped to a negative region, opining that it represented the future of hydrocarbon.
Arguing that non-oil export is the most sustainable FX earner at the moment, he pointed to people, process and payment as some of the most challenged areas that must be addressed to grow the non-oil economy.
The expert stated that the impacts of the Russian-Ukraine war were real with “countries that are ready already taking advantage of the supply gap created by the crisis”.
He noted that Nigeria could leverage the challenge to its advantage but added that hard decisions had to be made to catch up with what other countries around the world are doing in that regard.
According to Ayemibo, part of the quick actions that must be made included growing value-added products, which would require agro-processors partnering farmers.
It has become indisputable that unsteady policy has remained one of the main reasons the Nigeria’s Commerce and Industry sector is still epileptic, or lagging behind, even when many countries look up to her for various supplies.
Consistency in policy direction remains the backbone of any flourishing economy across the globe. It suffices to assert that countries, whose policies are usually flip-flop, continue to witness unpalatable growth in their industrial prospects.
To get it right, Nigeria’s leadership must be ready to take drastic measures that would stabilize the country’s foreign reserves no matter whose ox is gored. Hence, the parallel (black) market as regards the money market needs to be eradicated from the system. But to actualize this, the official wing domiciled in the banking sector must be duly sanitized.
Also, the various borders of the country must be strengthened to prevent influx of unwanted commodities, which is currently the order of the day. Thus, corruption must be fought to standstill.
