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Monetary Policy alone cannot solve FX challenges – Emefiele

In the face of rising demand for foreign exchange for goods, services, and other needs, the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele says monetary policy alone cannot wholly address the country’s foreign exchange challenges.

Mr. Emefiele disclosed this in an to the maiden bi-annual Non-Oil Export Summit held in Lagos, on Thursday, noting that the CBN had been working to manage both the demand and supply side to meet foreign exchange obligations.

Attributing the current challenges of the Nigerian economy to a combination of local and global factors such as the COVID-19 pandemic, delays in global logistic value chains and local security challenges, he expressed concern that most of Nigeria’s current sources of foreign exchange inflows were unreliable and were prone to fluctuations of global economic developments.

Emefiele noted that the global economic challenges had impacted food production among others and had exerted undue pressure on the economy, thereby exposing the fragility of the Nigerian economy and making macroeconomic management very difficult. 

While stressing the need for a more diversified economy, the Governor said Monetary Policy alone could not bear all the burden of the expected adjustments needed to manage the challenges to the Nigerian economy.

“These problems call for urgent design and steadfast implementation of other supportive, structural, and complementary policies that are broad-based, coordinated, and focused on complementing the work of the monetary authority,” he noted.

L-R: Deputy Governor, Operations, CBN, Mr Adebisi Sonubi, Deputy Governor, Financial system stability, Mrs Aishah Ahmad, Lagos state Governor, Mr Babajide Sonwo-Olu, Governor, CBN, Mr Godwin Emefiele , Deputy Governor, Corporate Services, Mr Edward Adamu and Deputy Governor, Economic Policy, Dr Kingsley Obiora at the Race “To 200” Summit in Lagos 

Mr. Emefiele reiterated the need for a more diversified economy, stressing that Nigeria could be great without crude oil, the global price of which the country had no control over.

He, therefore, urged all stakeholders to regroup by working together to reposition Nigeria on a growth trajectory by taking diversification of the economy much more seriously, emphasizing that Nigeria had very little choice left but to look inwards and find innovative solutions to its challenges.

In order to avoid sudden adjustments to Nigeria’s economic life, he said there was a need to focus on strategies that can help the country earn more stable and sustainable inflows of foreign exchange.

Although he admitted the enormity of the ultimate goal of US$200 billion in non-oil exports over the medium term, Emefiele expressed confidence that the goal was attainable, given the fact that many countries less endowed than Nigeria had achieved much in the field of agriculture. To underscore his point, he said within a short period of implementing the Non-Oil FX Rebate Scheme, the country had recorded a significant increase in non-oil export repatriation, adding that eligible exporters had been paid over N3.5 billion in rebates.

In his remarks, the Governor of Lagos State, Mr. Babajide Sanwo-Olu, expressed optimism that the Lekki Deep Seaport, which he described as the largest in West Africa, will be handed over for use at the end of 2022, thereby providing enormous opportunities to exporters to ply their trade and by extension improve the export earnings of the country.

As part of efforts to decongest the Apapa and Tin Can Island Ports in Lagos, the Governor said the State Government was awaiting approval for work to begin on the Badagry Ports in the Western part of Lagos.

Reporting by Biodun Dare, editing by Daniel Adejo