The Chief Executive Officer (CEO), Nigeria Economic Summit Group (NESG), Laoye Jaiyeola, has expressed concern over the dwindling value of the naira, saying the local currency is no longer a store of value.
Jaiyeola spoke in Abuja at the NESG 2022 Macroeconomic Outlook Report launch.
He gave the example of investing in Treasury Bills, saying with inflation currently at over 15 per cent, the moment any investor buys Treasury Bills, inflation and other factors will wipe away the expected profit or interest from the investment.
“Why should you tell anybody in Nigeria to store his money in naira? When your interest rate on the naira in some places is even lower than the interest rate of some foreign currency?” he asked.
“If you put your money in treasury bills now in a one-year treasury bill, I’m not sure you are going to get up to five per cent per annum; inflation is 15 per cent. Effectively from the day you save your money, you have lost your money. That explains why people will still go and buy money and keep it in dollars because naira is significantly becoming something that is not a store of value.”
On his part, the International Monetary Fund’s (IMF) Nigeria Country Representative, Ari Aisen, urged the Federal Government to take full charge of its reform programmes.
Aisen, spoke against the backdrop of recent policy inconsistencies on whether or not petrol subsidy should be removed, called on the government to “be in charge of reforms instead of being reactive,” The government should not wait to carry out reforms when it is convenient.
The NESG report noted that “The challenge to the poor forex supply in Nigeria is mainly attributable to the lack of diversification of forex sources, with colossal dependence on crude oil export proceeds and, more recently, foreign borrowings.”
The report suggested the additional task facing forex management in Nigeria is the frequent intervention of the CBN at the forex market, which exerts intense pressure on the country’s external reserves.
“Faced with the continued dwindling of the external reserves, the apex bank resorted to exchanging rate devaluation and forex rationing among end-users.”
“These challenges send wrong signals to prospective investors who are more concerned about the safety of their investments (particularly forex repatriation at maturity of investments, in addition to returns),” according to the report.