A former Governor of the Central Bank of Nigeria, Prof.
Chukwuma Charles Soludo, has called on the Federal Government to scrap its
policy of multiple exchange rates.
He said that was the only way to get the country out of the
biting economic challenges and get back on the path of growth.
According to him, policy makers must step aside the current
multiple exchange rates’ regime and reduce the wide spread between the official
and parallel market exchange rates of the naira to a maximum of three to five
per cent.
The ex-CBN boss made this observation in Lagos while speaking
as Chairman of the Economic Discourse organised by the Institute of Chartered
Accountants of Nigeria.
Soludo commended steps taken by the CBN in the last few
weeks to restructure the foreign exchange market, but noted that there was
still a long way to go to get the economy back on track.
The former CBN governor stated, “With regards to exchange
rate, I can see quite some changes in the last few weeks. I think some steps
are beginning to be taken, but it is still quite a long way to go to get to a
stable and predictable level that eliminates the premium among the multiplicity
of exchange rates.
“Nigeria must get out of multiple exchange rates and we must
eliminate the premium, get it back on track at a competitive exchange rate
regime. The uncertainty that is created by that is so enormous; and with the
oil price rising and with the increase in oil earnings, this is the time to
take bold steps and do the needful.”
Explaining how policymakers can expunge the multiple
exchange rates and close the gap, Soludo said it was simple because the nation
had done it before.
He said, “On bold steps, the template is not too far. We
have done it before and it is just going back to it. If it (the template) is
not broken, why mend it? Get back and eliminate the multiple exchange rate
regime, eliminate the premium, or at least significantly reduce it to not more
than between three to maximum of five per cent premium between the parallel and
official exchange rates.
“On what it takes to do it, that is basically known. Get the
public finance okay; I can tell you that with the momentum of what is going on
in the rest of the world, by the end of this year, we should actually be having
stocks of reserves in the range of about $50bn or $60bn.”
According to Soludo, getting the country out of the current
economic recession was no big deal.
He stated, “And getting Nigeria structured and reengineered
towards non-oil economy, that again will require a lot more serious work. The
recession is not the issue. We will get out of it in spite of government
policy.
“I think this is a time Nigeria should actually be making
hard decisions to transit away from an oil revenue economy. And that’s the
serious work.”
By Ameh Comrade Godwin
