OSINBAJO SUPPORTS MARKET-DRIVEN FOREX MANAGEMENT IN NIGERIA

WorldStage internet news Yemi Osinbajo, vice president of Nigeria, has stated that a more market-driven strategy will be beneficial since it will increase confidence.

This comment was made by Osinbajo during his presentation at the 3rd Ministerial Performance Review Retreat on Monday at Banquet Hall in Abuja for Ministers, Permanent Secretaries, and top government officials.

“The President Muhammadu Buhari Administration: Reflections on the Journey So Far” was the title of the vice president's presentation.

That synergy's failure has resulted in needless setbacks in our economic performance and planning.

The fiscal goals for manufacturing and industry must align with the imports that are eligible.

The second is that there is still a problem with our exchange rate management; the convertible currencies is still under a lot of downward pressure since demand is much outstripping supply.

Demand control and rationing have been tried, but they haven't really worked because setting the price when a big arbitrage in the parallel market only provides for massive rents.

According to him, rationing and demand control like this would only add to the backlog of remittances for foreign companies looking to repatriate their legal profits.

The vice president claims that it is crucial to debate how to best control the situation by identifying a clear, confidence-boosting mechanism for raising supply and moderating demand.

I believe a more market-driven strategy will be most effective; managed floats undoubtedly call for some price discovery.

The Foreign Exchange Market (FEM), interbank Foreign Exchange Market (IFEM), various iterations of the Dutch Auction System (DAS), Wholesale Dutch Auction System (W-DAS), and Retail Dutch Auction System are so controlled price discovery (R-DAS).

Although the regulations might not have been flawless, it seems like there was some stability and clarity.

“When people are aware of competing ways to get foreign exchange, confidence will soar, and inflows will rise.”

The vice president declared that in our economy, value addition and productivity must be prioritized.

He claimed that the Medium-Term Economic Plan 2021–2025 did a good job of explaining the necessity of easing generalized trade restrictions.

Osinbajo claimed that broad import restrictions were a drag on economic growth because they may affect many items that are used in manufacturing, which would have a negative impact on value addition in the economy.

The issue is not with importation per se; rather, it is with what you import and what you do with it; value addition is what counts.

This is how employment and money are produced; many manufacturing nations across the world import significantly more than Nigeria does.

Let's use the production of clothing as an example. Bangladesh, the world's top producer of clothing, imports the majority of the cotton it uses.

It barely grows 2% of the amount of cotton Bangladesh needs annually, and in 2019, Bangladesh bought $11.8 billion worth of textiles and apparel while exporting 37.94 billion worth of clothing, according to him.

President Muhammadu Buhari had earlier opened the retreat by stating that high-impact projects had been carried out all throughout the nation.