Price Crude Oil in Naira to Strengthen Local Currency, Expert Advises FG

A financial expert, Mr Okechukwu Unegbu, has advised the Federal Government to consider pricing the country’s crude oil, in Naira in order to strengthen the local currency. Unegbu, a past president of the Chattered Institute of Bankers of Nigeria (CIBN), said this in an interview with the news agency on Sunday in Abuja.

According to him, the country’s crude oil, bonny light, is of the highest quality and most sought after in the international market. He said that the government could afford to ignore OPEC regulations and start pricing its crude oil independently in Naira, adding that it would not reduce patronage.

“Floating the Naira was a major error that has exacerbated inflationary trend and caused the people so much pain. Nigeria should do something about pricing its oil in Naira. We should leave the regulations of the Organisation of Petroleum Exporting Countries (OPEC), and price our oil independently,” he said. Unegbu also advised the government to ignore most economic prescriptions by the Bretton Woods institutions and produce indigenous solutions to the nation’s economic challenges.

Also, an economist and a past president of Abuja Chamber of Commerce and Industry, Dr Chijioke Ekechukwu, said that the Naira could be strengthened if the country could earn substantial foreign exchange revenue on a daily basis.

Ekechukwu urged the Federal Government to use every possible avenue to increase the country’s export base to earn more forex. He advised the government to ensure that the country’s crude oil sales met OPEC quota of 1.8 million barrels per day. He said that the government should ensure that the revenue from crude oil sales came in on a daily basis through the Central Bank of Nigeria (CBN). If we sell our exports on a daily basis, we must get the revenue on a daily basis.

“The revenue must come through the CBN, and the apex bank must receive and distribute such revenue almost immediately. But if we have inflow coming in as revenue and the CBN is not seeing it, the NNPC is selling but we do not know where the money is going to, there will be shortage of forex.

“We need a situation where we earn forex on a daily basis, and we have excess of it in the market for both the banks and the Bureaux De Change. Until we have such a situation and we are able to meet all the demands of importers, the exchange rates will not come down in a hurry,” he said.

According to him, the Federal Government should also initiate a deliberate policy of total curtailing of importation so that what we can not source locally should not be consumed. He said that such a step would drastically reduce the demand for the dollar and other foreign currencies.

“It is either there will be a deliberate policy of total curtailing of importation so that whatever we cannot source locally we do not need, so that the demand for foreign exchange will drop, ” he said.

The expert said that the idea of unifying the dual exchange rates and floating the Naira as done by President Bola Tinubu, without a strong export base, had been counter-productive. He urged the Federal Government to revisit the policy decision. Floating the Naira when your balance of trade is heavy on the negative side was ill-advised.

“We were not prepared with enough in our foreign exchange reserves. We did not have enough revenue in foreign exchange to float the Naira.

“If possible, the policy should be reversed so that we can go back to moderating the foreign exchange market” he said. Ekechukwu also advised that payments of fees to foreign universities should be curtailed.

“There should be a deliberate policy to reduce payments to foreign universities,” he said. According to a renowned economist, Prof. Ken Ife, if inflation can be addressed; if we produce more food, things will improve. It will also address the issue of “dollarisation’’ of the economy. Ike said that the importation section required four billion dollars monthly to import goods and services into the country.

“But because we have excess liquidity in the system, speculators are simply keeping the dollar as a store of value. Excess liquidity is a major challenge to the Nigerian economy. People with so much Naira go looking for dollars. They are now betting on the Naira, and the forward bet on the Naira is that it will continue to go down.Everybody keeps holding the dollar and using the dollar to trade with the expectation that the Naira will continue to fall.

“If the expectation is that the Naira will appreciate, people will quickly sell their dollars,’’ he said.The Naira experienced a free fall after Tinubu unified the dual exchange rates and floated the currency in 2023. The policy, coupled with the prevailing dollar illiquidity had seen the Naira exchanging for as high as N1,900 to the dollar in February. However, the currency started gradual appreciation in March, peaking at N1, 100 to the dollar at the parallel market in early April.

This was as a result of the monetary policy tightening by the CBN, and attempt to improve dollar liquidity by selling some treasury bills to foreign portfolio investors,

The Naira, again, started losing steam and becoming weak towards the end of April, and now exchanges at N1,400 to the dollar. Iraq Seeks Termination of UN Assistance Mission
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