President Bola Tinubu has assured Nigerians and investors that there is an ongoing plan to boost the country’s foreign exchange liquidity.
This was as the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said that the country was expecting about $10bn inflows in the nearest term, which would help to clear foreign exchange backlog and stabilise the naira.
Speaking at the 29th Nigerian Economic Summit in Abuja on Monday, Tinubu acknowledged the challenges faced by the business community in the financial markets and assured them of additional foreign exchange liquidity to restore market confidence.
He also emphasized his administration’s commitment to strengthening governance by establishing a performance and result-oriented public and civil service culture and structure.
The President outlined the eight priority items of his administration to include ending poverty, achieving food security, economic growth and job creation, access to capital, inclusivity, security, fairness and rule of law, and anti-corruption.
He mentioned several measures introduced by his government to resuscitate the economy, such as the N5bn intervention to support small businesses and the agriculture sector, and also announced upcoming initiatives, including a new student loan programme and consumer credit schemes.
Tinubu called on the private sector to support his vision for a greater Nigeria and urged them to bring their ideas, leadership, capital, and collective will to build a future of renewed hope.
He emphasized the importance of a collaborative relationship between the government and the private sector, citing the success of public-private partnerships in transforming Lagos State.
The President expressed his readiness to deliver on his promises to Nigerians and called on the private sector to join him in this endeavour.
On clearing the FX backlog which has drained investor confidence, the president said, “All foreign exchange future contracts will be honoured by this government.”
“I assure you we have a line of sight to the foreign exchange we need to refloat this economy. And we will get it,” He added.
In his remarks, the chairman of the National Economic Summit Group, Mr Niyi Yusuf said that with more than 133 million multidimensionally poor Nigerians, there are potentially more risks of stagnation and distress if a low-growth and low-investment era persists.
He also said that the low access to and increasing cost of foreign exchange, high cost of inventory, imported inputs, and operations, coupled with the diversity of taxes, continue to erode business balance sheets, with resultant contraction in production and employment.
He noted that the country stands at a critical point in its history, and the people’s challenges demand immediate, concerted efforts while noting the need for the parties involved to act immediately with a shared sense of urgency.
Yusuf explained that the nation needs a macroeconomic stabilisation programme supported by an aggressively scaled national security effort to halt all forms of syndicated and organised crime around crude oil and solid minerals and also a made-in-Nigeria agenda.
There is also a need for urgent investment and a national job creation plan that drives the creation of a huge volume of high-quality jobs, among other reforms.
He said, “This year’s summit has been calibrated as a burning platform to answer the question of the essential pillars of economic transformation that would get us to the future envisaged by the government.
“The need for urgent strategic shifts that impact the ease and cost of doing business within a relatively short period is a matter of existential threat to the survival of enterprises and entrepreneurs.
“The low access to and increasing cost of FX, high cost of inventory, imported inputs, and operations, coupled with the diversity of taxes, continue to erode business balance sheets, with resultant contraction in production and employment, which the conference will have discourse on to address.”
Yusuf added that large firms are battling low-capacity utilisation, while medium, small, and micro-enterprises grapple with multidimensional complexities. These poor economic outcomes have created worsening social conditions that cannot be taken for granted, he added.
The Minister of Finance and coordinating of the economy, Mr. Wale Edun, has stated that around $10bn of forex inflows expected within weeks rather than months.
Edun stated this during a panel session at the ongoing Nigeria Economic Summit.
He said, “In addition, from the supply of foreign exchange through NNPC, increased production, reduced expenditure, from transactions such as forward sales, from our discussions with sovereign wealth funds, that are ready to invest and provide advanced alongside that investment, there is a line of sight of $10bn worth of foreign exchange in the relatively near future in weeks rather months.”
The Minister also disclosed that the President had signed two executive orders geared towards ensuring liquidity in the forex market.
He said, “Mr. President announced that he had taken measures to ease illiquidity in the forex market which we know is very problematic at this time.
“The market is illiquid; it’s not functioning properly because there is no supply and there are various reasons for that. The solution that the President has put on the table is that he has signed an executive order that effectively allows under forbearance all the cash that is in the domestic economy to legally come into the formal money supply”
“Along with that, there is another executive order that allows domestic issuance of foreign currency instruments so that they will have the incentive to provide that foreign exchange from whatever source.”
In the near future, the Federal Government also plans to automate transactions in the entire foreign exchange market to tame wide arbitrage and punish naira speculators.
According to Edun, all dealings in the FX market, from the official to the money changers where huge arbitrage has consistently occurred, will be thoroughly monitored and offenders fished out and punished.
He admitted that Nigeria’s foreign exchange market is not functioning effectively due to illiquidity and that the government is prepared to do everything required to change the status quo.
“Foreign exchange market will simplified and reformed such that all legal and legitimate transactions will fall within the purview of the authorities and in the formal foreign exchange market. Anything outside that will be illegal, a criminal offence and will be punished,” Edun said.
In his comment, the Governor of the Central Bank of Nigeria Yemi Cardoso, assured that the apex bank, going forward, will take its objective of price stability “very seriously indeed.”
He said the plan is to have a foreign market that is fit for purpose and works for everybody, which can be predictable and with no opacity.
“We are going to come out with an elegant document that will tell you the rules,” the governor assured.
It was also disclosed that the apex bank is preparing a document that will set out clearly the rules of the foreign exchange market.
He noted that the central bank is focused on ensuring Nigeria has a market that is “predictable and without flip-flops.”
He added that while efforts to unify the foreign exchange market have not been perfect, they have led to more revenue coming into the country.
The governor also said he was expecting foreign investment inflow from foreign portfolio investors.
He added, “In due course, we will see the outcome. There are more difficult decisions to be made, but two very difficult decisions have been taken. Now, it’s a question of managing things to get to where we want to get to. And that is where we want to get to be a place where we have FX that is fixed for purpose. A FX that works for everybody. A FX market where you know the rules. A foreign exchange market where there are no policies flip-flops. An FX market that you can predict. That is what we do.”
He added, “We will come out with something that is representative of the true market because the market will adjust to some of these things over time. I’m happy to be frank
“We have an enormous amount of interest from foreign portfolio investors, pips stakeholders who really and truly are interested in continuing to engage with Nigeria. The reason, of course, is that they can see where this is all going. I just want to say you’re going to find a Central Bank going forward that would take its objective of price stability very seriously indeed,” he added.
The Federal Government also plans to broaden the official currency market to include other “legitimate” participants, including bureaux de change and financial-technology companies.
This was according to the chairman of the presidential committee on fiscal policy and tax reforms, Taiwo Oyedele, at the economic summit.
He said, “We currently have a market that is not working and it’s not going to work in its current format.
“We don’t have sufficient liquidity even if you combine the parallel and the official markets.”