CEM REPORT | Godwin Emefiele, Governor, Central Bank of Nigeria (CBN), has said Nigeria’s forex needs goes to petrol, rice, sugar and wheat imports.
The Nigeria’s apex bank Governor who revealed this while speaking at the ongoing World Bank /IMF Spring Meetings in Washington DC, said that 40 per cent of Nigeria’s forex needs goes into funding imports.
He further said the apex bank has instituted policies that ensure that rice import is stopped and gradually achieve local refining of petroleum products.
“I have always said that between the import of refined petroleum products and rice, sugar, wheat consume 40 per cent of forex needed to fund imports in Nigeria.
And if we find, by the end of this year, a situation where we do not need forex for petrol import, or rice and wheat, demand will drop. Once the demand drops, you will find that whatever supply we have will be able to match the demand and we will be able to achieve a stable exchange rate,”
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Speaking on how this affects the country’s exchange rate, he explained that Nigeria operates a managed float exchange rate regime and the body is currently developing homegrown solutions to fix the challenges it’s experiencing as regards exchange rate.
“What is required is for you to go back and develop your own homegrown solution that helps your problem. Let me say that we are on a managed float exchange rate regime, which means we cannot adopt what is being proposed, that we go on a free float policy. Doing that will create an exchange rate spiral for Nigeria, as long as demand surpasses supply of foreign exchange in Nigeria,” he said.
He further added that Nigeria’s exchange rate problem has persisted since 1986, stating that currency adjustment plans are in place.
“We are also doing something to adjust the currency, for instance between 2015 and now, you would observe that we have adjusted the currency from about N155 to a dollar to N410 to N420 to dollar that it is today. So, we cannot be accused of not adjusting the currency. We have been gradual in doing that,” he said.
“At the same time, we are also to be given a chance, so that while we are adjusting prices, we must also do something about demand and supply. That is why we are saying that we need do something that ensures that those things we can produce locally, are not imported, so that demand for foreign exchange will reduced, and that will ensure that prices do not rise beyond expectations of Nigerians, and we are achieving that”.
He also said, a lot is been put in place to stop importation of products that requires dollar invention.
“We have done a lot of interventions in agriculture, is it rice, maize, and so on. We have stopped import of rice and maize. With Dangote refinery coming with 650,000 barrel of oil a day, that will also reduce the volume of forex used in petrol import,”
This rides on the back of the World Bank advising Nigeria to rethink the provision of N4 trillion for petrol subsidy payments in the 2022 budget.
David Malpass, president, World Bank Group, said the provision of petrol subsidy in Nigeria is not targeted at those most in need, encouraging Nigeria to rethink its subsidy effort.
Naira exchanges at N489 to dollar at the parallel market and N416.08 to dollar at the official market.