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Since the observed appreciation of naira over all foreign currencies following the sustained injection of dollars into the interbank market by the Central Bank of Nigeria (CBN), industry followers had been one in stressing that Nigerians should not be carried away by the momentary gain of naira.
According to them, what Nigeria has been experiencing can best be described as artificial stability which can plunge in a split second if CBN stops dollar injection.
Experts are upbeat that the best appreciation of naira can only come when the production capacity of ailing industries are looking up, saying only provision of ease of doing business including power can take Nigeria to the region of realistic naira appreciation. To them, what we are seeing is only ‘fake’ appreciation of naira which can only stand at the short terms and not even the medium or long run.
Accordingly, the leadership of the Enugu Chamber of Commerce, Industry, Mines and Agriculture (ECCIMA), under the headship of its Director General, Mr Emeka Okereke, has said the CBN would not be able to sustain the recent appreciation in the value of the naira.
While calling for the true liberalization of the foreign exchange market, he however commended the CBN for implementing policies that helped to stem the depreciation in the value of the naira, Okereke expressed doubt over the sustainability of the development.
To him, “For about two weeks now the naira has had a very grand appreciation to the dollar, which is a big relief to most Nigerians”.
“But beyond that, the worry of most discerning Nigerians is its sustainability – is it a temporary development that cannot be sustained?
“For us in the organised private sector, the question on our minds is why now? What had kept the CBN from intervening in the past?”
ECCIMA boss said the recent gain of naira cannot be only linked to the dollar injection but to the results of peace in Niger Delta which raised our crude output at a time world oil price is looking up which jerked up Nigeria’s foreign reserves from where the VCBN is sourcing the dollars in the first instance.
Okereke noted that “until the Nigerian economy was diversified to encourage manufacturing and massive private investment in the non-oil sectors, the value of the naira would remain weak”.
“The worry of most Nigerians is that we have gone through this circle over and over again, which is why most of us are not excited about this gain (in the value of the naira).
“Our concern is the structure of the economy because the economy is a mono-economy that is dependent on oil, which is why this gain in the value of the naira is coming at a time the value of oil is gaining.
“I think what CBN is doing is very temporary, at the end of the day we must liberalise the foreign exchange market.
“Yes, we are happy with what CBN has done, but if the price of oil plummets again tomorrow will CBN be able to inject more dollars as it is doing now?
“In our joy that naira is gaining value; we must also look at the medium term and long term sustainability of this policy.
“What we are seeing now is government using its regulatory framework to influence the value of the naira but the truth is liberalisation is the only way to deepen diversification”, ECCIMA boss averred.