A fixed exchange rate that overvalues the naira is artificial because it’s not backed by the value of our exports. It promotes an import economy and leads to dollar scarcity. The constant depreciation of the Naira in the parallel market therefore stokes inflation.
The Federal Government of Nigeria and the Central Bank of Nigeria should obsess less on maintaining an artificial value of our currency and focus on a truly productive economy that exports ever more value-added products.
No need to ban forex for the imports of 40 items. It doesn’t work and only creates smuggling. Just use higher tariff rates that make imports expensive, and create incentives for local manufacturers to be more competitive vis a vis imports from China etc.
The rich can afford imported champagne. The average Nigerian can buy locally produced goods.
A Naira that’s bought and sold at natural market prices will also attract massive amounts of foreign currency investment into our country.
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The combination of such investment and the dollars we earn from exports will eventually strengthen the Naira to its natural value. Multiple exchange rates MUST be abolished for the Naira to thrive.
All this, of course, requires a truly independent and professional central bank. Glad leading presidential candidates Atiku Abubakar, Peter Obi, and Bola Tinubu are all thinking about this matter. It’s fundamental for realigning the economy to create more wealth for Nigeria & Nigerians.
