The only solution to the instability of Naira is the funding of Bureaux De Change (BDC).
Muhammadu Sanusi II, the dethroned Emir of Kano, and former Governor of the Central Bank of Nigeria (CBN), made the above statement.
While lecturing on the United States of Naira: What plan for unification, during a recently-held webinar, Sanusi said the CBN needs to consider funding the BDCs across the country in order to stabilise the value of Naira against foreign currencies.
Below are what Sanusi said at the webinar:
I think what the bank is trying to do is the bridge that gap and moves have been made in July which has brought the CBN rate and the NAFEX rates closer but the BDC rates remain an outlier.
It is a small percentage of the market, but it does have an impact on speculation, which is why it is important to fund that market.
And once the Central Bank has enough money to fund that market, it will probably converge.
So, I would not be interested in moving the rates towards N470, for example, but I would like to see a convergence of CBN and NAFEX, which will take care of over 90 percent of the transactions in the market and there is some small funding for BDC rate to bring it back to that level.
It is what the IMF and the World Bank have asked for. It makes for positive transparency; it makes for clarity of direction; it also reduces the speculative demand for naira.
But we think otherwise…
In our opinion at Unmask NG, Nigeria is a country that survives only on one major exportable product, which is oil. Thus, the country’s is exchange rate is affected every time oil price falls or rise in the global market.
Contrary to Sanusi’s recommendation to CBN, we think this challenge of Naira devaluation will remain a continuum until the Nigerian government can diversify, and take advantage of other sectors of the economy, like agriculture, and the IT industries.
Should Nigeria stop depending on a major exportable product to survive, as it is, there is a probability that inflation will drop and the dollar-naira exchange rate will be more favourable for an average Nigerian.