Ezekwesili makes case for review of Nigeria’s foreign exchange policy

Mrs Oby Ezekwesili, Senior Economic Advisor, Africa Economic Development Policy Initiative has called for the review of the country’s foreign exchange policy to encourage foreign direct investment.
Ezekwesili, who was speaking in Abuja, described the policy as complex and incapable of engendering confidence in foreign investors.
“Ask the government to fix the exchange rate policy. It doesn’t engender confidence in anyone. A policy that is so retrogressive cannot engender the necessary private sector participation in a large economy.’’
The former Education Minister said that if the Federal Government failed to “fix’’ the foreign exchange policy, potential investors would continue to hesitate to come to Nigeria in spite of government’s intentions.
In its last Africa Pulse report, which analyses African economies, the World Bank said restrictions on access to foreign exchange had continued to hinder rigorous economic recovery in the Nigeria.
It said foreign exchange liquidity conditions had remained tight and were holding back activity in the non-oil sectors, just as the manufacturing and service sectors had remained particularly weak.
According to the report, the country’s foreign exchange market is run under a Managed Float Policy, initiated by the Central Bank of Nigeria (CBN).
In recent weeks, the CBN had introduced the Small and Medium Enterprise Forex window as well as the Investors and Exporters forex window.
It also increased, from 8,000 to 40,000 dollars, the volume of foreign exchange that a single Bureau de Change could bid for in a week.
These are in addition to the consistent intervention of over two billion dollars since February for genuine customers through the inter-bank market.
Market analysts believe that at the next Monetary Policy Committee meeting, the CBN will make little changes to the current monetary policies.
Currently, the Monetary Policy Rate (MPR) is at 14 per cent, Cash Reserve Ratio at 22.5 per cent and Liquidity Ratio at 30 per cent.
There have been no major monetary policy changes since July 2016.