The Association of Bureaux De Change Operators of Nigeria (ABCON) has called for realistic measures to bridge the wide margin between the official and parallel market exchange rates.
ABCON pointed out that the manufacturing sector source for forex from both parallel and official markets but based their planning data and cost on the parallel market exchange rate.
The association said this in a statement issued after its Quarterly Economic Review for the second quarter of the year.
The association also called for reforms that will reduce government spending and also curb the rising trend in the nation’s public debt.
The bureau operators said, “It is ambiguous to conclude that because the volume of transactions that pass through the official market is larger than the parallel and thus it is rational to adopt the exchange rate from the official sources as the realistic rate. The obvious mobility of funds between the markets actually voids this proposition.
“Most industrialists, especially from the manufacturing sector patronise the two markets and of course derive their planning data and parameters based on the parallel market exchange rate.
“Thus, if all other economic indicators take inputs from the industrial sector performances, there is therefore a mismatch in basing other determinants on the official exchange rate.”
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The association also advised the government to block revenue leakages in bloated public sector contract and embrace proper management of governance and administrative costs.
It said, “The fact that remarkable economic recovery is not certain and the rather unstable state of financial markets is indicating that the country could be on the verge of a major debt crisis.”
“There is therefore a serious need for the introduction of fiscal reforms that would scale down government spending and to consider restructuring the loan profile and especially properly examine the conditions tied to Chinese denominated debts.
“We recommended a season of economic austerity to replace the increased debt pile up for the coming generation.
“Moderation of governance and other administrative costs along with blocking loopholes/leakages from inflated contracts will more than satisfy the need for increased debts.”
ABCON reiterated its commitment to enhancing capacity of BDC operators, especially through the ongoing nationwide training of operators on BDC operations, adding that this will boost government efforts to achieve stable exchange rate of the naira.
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