The Central Bank of Nigeria (CBN), has explained that the high demand for foreign exchange (forex) on certain goods which gulped up a significant fraction of Nigeria’s foreign exchange informed the Federal Government’s decision to suspend access to it for the importation of rice, wheat, and other consumables.
Governor Godwin Emefiele of the central bank made this known at the IMF/World Bank Spring Meetings in Washington DC, United States.
Emefiele made this explanation on the backdrop of a charge by the President of the World Bank Group, David Malpass, for Nigeria to jettison its multiple exchange rate systems and maintain a single exchange rate policy.
Addressing the charge by IMF and World Bank, Emefiele said different countries were facing diverse economic challenges and must develop a framework peculiar to their economic situation.
His words: “Both the IMF and World Bank are our prime development banks, and we have received support from them at different times in resolving some of our economic challenges, particularly bordering on finance.
“Nigeria’s situation is very peculiar and that is why we have continued to engage the IMF and World Bank to show understanding of our local problems.
“Yes, they want us to freely float the exchange rate and you do know that this will have some impact on the exchange rate itself in the sense that when you allow that to happen, you will have some uncontrollable spiral in the country’s exchange rate.
“Between the importation of refined products alone, into the importation of whether it is rice or sugar or wheat this consumes close to about 40% of forex that is needed to fund imports in Nigeria.
“And if we find for instance by the end of this year we are able to say we are no longer going to be needing foreign exchange to import petroleum products, right now no foreign exchange for the importation of rice, maize, and some amount for wheat (sic), I believe some demand will drop and when demand drops what you will find is that whatever supply we have is able to match the demand and then we can see a stable exchange rate. That is what we are trying to see to.”
