Naira appreciation not sustainable, says Enugu Chamber of Commerce DG

Ihuoma Chiedozie, Enugu

Director General of Enugu Chamber of Commerce, Industry, Mines and Agriculture, Mr Emeka Okereke, has said the Central Bank of Nigeria would not be able to sustain the recent appreciation in the value of the naira.

Okereke, who spoke in an interview with our correspondent in Enugu, said the apex bank should liberalise the foreign exchange market.

Although he 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.

Speaking on the ‘implication’ of the apex bank’s foreign exchange policy, he said, “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?”

Okereke, who linked the appreciation in the value of the naira to recent gains in the price of crude oil in the international market, and the attendant rise in the country’s foreign reserves, said the current structure of the Nigerian economy hinders private investment, which he described as the answer to the country’s economic woes.

According to him, 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,” he said.

Canvassing the liberalisation of the foreign exchange market, Okereke said, “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 way to go.”

He further canvassed a downwards review of the interest rate, which, according to him, discourages private investment.

“We need private investment, whether foreign or local – we hope that as the naira gains in value, the interest rate also comes down so that businesses could thrive.

“The current interest rate, which is 25/30 percent, discourages private investment.

“It is an area the CBN should look at; the Federal Government should intervene by reviewing the interest rate,” Okereke added.

Source: Punch

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