Multiple FX Regime Hinders Investment, Diaspora Remittances, NESG Decries

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The Nigerian Economic Summit Group (NESG) has said that the failure to address the current prevailing condition of multiple exchange rates will continue to reduce the much-needed flow of foreign investments and official diaspora remittances in the country.

The group made the assertion in a communique it issued on Sunday, and signed by its Chairman, Asue Ighodalo.

“International investors, being savvy and rational, will not invest where there is a real risk to their ability to access and repatriate investment proceeds or when the functional currency is in sporadic depreciation.

“Multiple foreign exchange (FX) markets with significant price differentials create room for speculation, round-tripping, cronyism, and outright graft – with an attendant adverse effect on the economy. There is no better time to harmonise the FX rates than now,” NESG stated.

The Central Bank of Nigeria (CBN) has continued to maintained a multiple exchange-rate regime despite public outcry and heavy criticism, as naira continues to depreciate against the greenback (dollar). Recently, the naira saw its highest fall in decade when it depreciated to N710/$1.

At the meeting which was used to deliberate on Nigeria’s economy in the first half of this year as well as the security situations in the country, NESG urged the Federal Government to urgently “devise a pragmatic national security strategy that unconditionally guarantees the safety of lives and properties within the country”.

Commenting on the Medium-term National Development Plan (2021-2025), the group said, “The proposed Medium Term Expenditure Framework of the Federal Government clearly indicates that the rising fuel subsidy costs continue to exceed unsustainable levels. According to reports from the Federal Ministry of Finance, Budget and National Planning, it is clear that the current fuel subsidy regime’s debilitating impact on our fiscal fragility cannot be overstated.

“We urge the Federal Government to explore a systematic subsidy removal programme that cushions the impact on our most vulnerable population through a well-coordinated and effectively transmitted social protection regime”.

Part of the communique added, “We strongly believe these leakages have continued unabated because of the absence of sanctions and ineffective tax systems, We must return to the path of debt sustainability in the face of dwindling revenues not to create a debt burden for future Governments and, indeed, future generations.

“We must prioritise our expenditure, limit our spending to items we can sustain, and eliminate wastage and graft in Government. Governments, across all tiers, should lead by example through a drastic reduction in governance costs (such as running costs of the legislatures, the proliferation of government agencies, etc.) to reflect the austere times we face.

“We strongly advise greater transparency and simplicity in the management and communication of various subsidies (petroleum products, electricity, etc.) to establish their true costs that benefit the people.”

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