NIGERIA'S GROWTH MUST BE UNLOCKED BY FOREX REFORMS, ACCORDING TO RAZIA KHAN

The confidence of investors in the economy is a prerequisite for Nigeria's pursuit of rapid economic growth.

As the head of the Standard Chartered Bank's Research for Africa and the Middle East, Razia Khan, at the Global Research Briefing held in Lagos, FX reforms are the most urgent in the global economic headwinds that make it difficult for Nigeria and other emerging countries to access external grow economically.

Khan pointed out that while there has already been some foreign direct investment interest in the FX regime have deterred foreign investors from making a longer-term commitment.

Regarding foreign portfolio inflows, she added, Nobody is going to put money at a time when there's so much global market or one in which investors know they can put money in and get money.

“Inflation in Nigeria is under pressure because the parallel forex market determines pricing in Nigeria,” Khan said, allaying concerns that forex reforms would cause inflation to rise even further. “The sooner we see FX reforms prioritized, make the FX market functional, and allow the Investors and Exporters (I&E) window to have more price discovery,” Khan concluded.

“Based on what we've seen in the past, we don't believe that this action by itself is going to be that inflationary because anything that the parallel market back to authorized channels show in the smooth operation of that market and the containment of potentially out-of-control inflationary pressures,” the statement continued.

But we all know that a longer-term commitment to investment portfolio inflows has been deterred by the FX regime, which we have heard from several participants in the room. Nobody will put money when there is so high market volatility around the world. Unfunctioning markets are not something I will tolerate, she declared.

The aim would be that we will see the Big Bang liberalization of FX, but it can happen very quickly. So, this is something that the government might start moving on. We are aware that comprehensive fuel subsidy reform is probably not possible before the elections.

Nigeria's economy, according to her, won't function to its full capacity until “we see foreign exchange liberalization.”

With the parallel market—the pricing that is sent back to the rest of the economy—coming under growing strain, Khan remarked that there is a universal consensus that the current system cannot support an economy the size of Nigeria.

She stated, “We know that anytime there has been a worldwide slowing, there has been the same impact in Africa.” She was speaking about the tighter global financial circumstances that have arisen and what it all implies for African growth.

“You can see that that relationship between Sub-Saharan African growth and global growth has been pretty much intact looking at it over a long term period,” she said. “Usually with the lag that might be a global growth shock, and we tend to see the more pronounced impact in Africa the year following that global shock.”

Lamin Manjang, CEO of Standard Chartered Bank Nigeria, made mentioning the global high inflation that had led to a highly aggressive tightening across all the bankers bank.

We are responsible for creating this climate. Because none of the topics I have discussed here have been influenced by outside forces. We cannot stop until we begin to handle it well. With so many elections coming up, the panelists predicted that good things might not occur in the upcoming year.