An economist has recommended that the Nigerian government implement a policy where every liter of crude oil sold is receipted in foreign currency as a rapid solution to the Naira’s depreciation in the foreign exchange market.
Paul Alaje, Chief Economist at SPM Professionals, offered this suggestion during an interview with Channels Television on Thursday, emphasizing the necessity for the government to firmly execute policy interventions to restore investors’ confidence, particularly among multinational firms.
“There are things that must be done. If we don’t do these things, it will be impossible to stop the free fall of the Naira.
“Number one is crude oil in Nigeria today account for 70% of receipt in terms of foreign exchange receipt to Nigeria. As we speak, most of the monies that we receive from crude oil through domestic crude allocation, such purchases have been in naira, meanwhile the crude oil business is an international business.
“So it is important for us to say, if you must lift one litre of crude in Nigeria, all the receipts must be done in foreign currency, this is a short term measure that will boost forex inflow into Nigeria.
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“Another thing is, it is also said when fund is given even to those in authorities, how is this fund kept? Is it done in naira or dollar? So, a lot of persons seem to be hoarding the dollar and this signals to us that we have lost confidence in naira, we need to reverse that.
“Another solution which of course is non-conventional is, those who have no business with the dollar – you are not paying children’s school fees, you are not travelling abroad, you are not an organisation and you are not earning it – what are you doing with it?
“I’m talking of the short-term solution. If this is done, in a matter of weeks, we can stop what is happening.
“Now what are the medium and long term solution? Bureau of Statistics said over 80% of all our imports are finished products but only 5% of our exports are finished products, even the crude oil is not finished, it has to be refined somewhere else.
“So can we change the style, can we support the manufacturing sector so that we can have improved finished products? I am talking about 5 to 10 years solution. The truth is if we don’t start solving these problems today there will be no future at all.”
Source: Daily Post