The Financial Derivatives Company (FDC) hosted stakeholders in Lagos on Monday, 29th July 2019 to discuss the unification of foreign exchange in Nigeria to enhance the African Continental Free-Trade Agreement (AfCFTA).
It was a unique opportunity for industry leaders to engage in interactive sessions and encourage the use of the AfCFTA provisions to fix Nigeria’s exchange rate problems. The colloquium featured two panel discussions urging stakeholders to advocate for greater market determination and the use of a single exchange rate for the Naira.
The first session, moderated by Mr. Souleymane Diagne, Group Head for Trade, Ecobank Transnational Incorporation, discussed “AfCFTA as a catalyst of investment and GDP growth in Nigeria”. The session featured leading experts including Mr. Muda Yusuf, Director General, Lagos Chamber of Commerce and Industry; Dr. Ayo Teriba, CEO, Economic Associates; Dr. Folarin Gbadebo Smith, Director General, Nigeria Institute of Social and Economic Research; and Ambassador Chiedu Osakwe, Director General, Nigerian Office for Trade Negotiations. The panellists dissected issues relating to trade and how to create a foreign exchange system that is competitive.
The second session, moderated by Mr. Amine Mati, Senior Resident Representative and Mission Chief (Nigeria), International Monetary Fund, focused on “Exchange rate volatility, uncertainty and misalignment as impediments to regional trade and economic growth”. Ms. Madhur Jha, Head, Thematic Research, Global Research, Standard Chartered Bank; Mr. Taiwo Oyedele, Partner, West African Tax Leader, PWC; Dr. Bongo Adi, Senior Lecturer, Lagos Business School; Mr. Tunji Oyebanji, Chairman of Major Oil Marketers Association; and Mr. Musonda Chipalo, Principal Investment Officer, International Financial Corporation all provided research based insights and examined opportunities in taxation, investments and the potential benefits of a unified exchange rate system in Nigeria.
Mr. Mati emphasised that exchange rate unification should be a policy-driven decision made by the Government. He stated that: “Countries with multiple exchange rates have lower growth and higher inflation. A more flexible exchange rate in a reform scenario in Nigeria could boost Gross Domestic Product in the medium term. Nigeria has the Investors’ and Exporters Forex Window, Central Bank of Nigeria Exchange Rate, a parallel market rate, Retail Secondary Market Intervention Sales (SMIS) and Wholesale SMIS and these stifle growth and nurture inflation.
Multiple exchange rates have different implications across different countries in the world. We have analysed the situation in Sub Saharan Africa and have noticed that each country is able to succeed as a result of the policies that have been put in place to counter challenges. The IMF’s policy has been consistent on this issue, such that, we advise for the unification of exchange rates.”
The colloquium set out to discuss the status quo while offering solutions to Nigeria’s lingering issues relating to trade and foreign exchange unification.