Stakeholders Proffer Way Out of Naira Volatility, Rising Inflation

Naira volatility, despite foreign exchange interventions by the Central Bank of Nigeria (CBN), is being compounded by rising inflation, interest rate hike and slow economic growth with consequences for middle- and low-income earners, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe has said.

Speaking in Lagos at the weekend, Gwadabe said the unfolding scenarios raise the risk of stagflation with potentially harmful consequences for the poor within the economy.

He said that already, global growth is expected to slump from 5.7 per cent in 2021 to 2.9 per cent in 2022— significantly lower than 4.1 per cent predicted by the International Monetary Fund (IMF) in January.

To keep the Nigerian economy going strong in the face of these challenges, Gwadabe called for improved local production and diversification of the economy from oil.

He said the naira exchanges at N614/$1 at the parallel market, while dollar bids continue to rise as inflation rose to11month high (17.71 per cent) in May.

These occurrences, the ABCON boss noted, are eroding the purchasing power of households. “The biggest driver of inflation is the stubborn rise in food inflation. The average price level of the food basket rose by 1.13 per cent to 19.50 per cent in May from 18.37 per cent in April. This can be reversed by increased support for agriculture and government policies that support the sector,” he said.

Gwadabe said Nigeria’s huge population and diaspora market, which attracts an average of $20 billion annually, can be explored to deepen dollar inflows to the economy.

He said that expanding the dollar receipt points through over 5,000 Bureaux de Change operators could deepen dollar inflows and significantly raise Nigeria’s forex position.

Gwadabe said that globally, BDCs remain one of the channels through which the Diaspora remittance funds come into countries.

He said that the BDCs are at the centre of economic development and have the capacity to attract needed capital for the development of the Nigerian economy and deepening of the forex market.

The ABCON believes the success of BDCs will be boosted by access to multiple streams of forex earnings to deepen the market, keep the naira stable and boost BDCs operations.

“Making BDCs one of the channels through which over $20 billion annual Diaspora remittances enter the economy will give depth to forex market and boost BDCs operations. Nigerian BDCs operators have also identified with the immense opportunities presented by Diaspora remittances and want to play a greater role in attracting more foreign capital into the economy. Reason being that remittances are known to help poorer recipients meet basic needs, fund cash and non-cash investments, finance education, foster new businesses, service debt and essentially, drive economic growth,” Gwadabe said.

*Continues online at www. thewillnigeria.com