In separate letters to the Governor of the Central Bank of Nigeria (CBN), Dr. Olayemi Michael Cardoso, and the Minister of Industry, Trade and Investment, Doris Nkiruka Uzoka-Anite, the NACCIMA boss charged the CBN to immediately announce the pegging of the naira to between N750 and N850 to the US dollars effective from March 21, 2024, and enforce stricter regulations on currency transactions.
The National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dele Kelvin Oye Esq., has proffered short, medium and long-term strategies to address naira depreciation, inflation surge and ensure economic prosperity for the country and its people.
In separate letters to the Governor of the Central Bank of Nigeria (CBN), Dr. Olayemi Michael Cardoso, and the Minister of Industry, Trade and Investment, Doris Nkiruka Uzoka-Anite, the NACCIMA boss charged the CBN to immediately announce the pegging of the naira to between N750 and N850 to the US dollars effective from March 21, 2024, and enforce stricter regulations on currency transactions.
In the letter to Cardoso titled 'NACCIMA's Suggestions for Addressing the Continuous Depreciation of our Currency," Oye outlined a multifaceted plan, segmented into short, medium, and long-term measures to address currency devaluation and inflation in the country.
He said, "This letter embodies the thoughts of the organised private sector on how we can tackle the lingering challenge of the naira's depreciation.
"It is our hope that you and your team can consider the ideas espoused here, and by implementing them, achieve significant progress in stemming the ugly tide of currency depreciation that currently bedevils the nation."
For the short term, Oye outlined enforcement of currency regulations, transparent communication, official transactions, remittance oversight, as well as monitoring and compliance as necessary in addressing the challenges.
He said, "The Central Bank of Nigeria (CBN) should immediately announce the pegging of the naira to between 750 to 850 naira to the USD effective from March 21, 2024, and enforce stricter regulations on currency transactions. This includes hefty fines, prosecution of breach of laws, and confiscation of funds involved in transactions that violate a specified exchange rate band, such as the 15 percent maximum difference from the official rate.
"The government should consistently communicate its policy intentions and economic measures to the public to strengthen confidence in the nation's economic management.
"All government agencies, at every level, should be mandated to conduct their transactions at the official rate, and severe penalties should be imposed for violations. On no account should government money go to the parallel market, directly or indirectly (through its contractors or government agents) without a certificate issued by the CBN or the Independent Emergency Economic Intelligence Committee.
“Any transaction above a certain threshold (to be fixed by the CBN every 90 days) must be backed by an undertaking by the financial institution/to pay the penalty of at least double the size of transaction if the facts used for seeking the approval subsequently becomes inaccurate.
"Strengthen the monitoring of financial institutions and enforce compliance with foreign exchange regulations. This would involve using the banking system to monitor and regulate the flow of foreign exchange in and out of the parallel market.
"Remittance Oversight: Implement policies to ensure that inflows from remittances are properly channeled through the official banking system and are used to support the Naira."
For the medium-term measures, the NACCIMA boss advocated diversification initiatives, financial literacy and inclusion, investment in infrastructure, support for Small and Medium Enterprises (SMEs) and inflation targeting, among others.
According to him, there is a need to "invest in and promote non-oil sectors to increase exports and reduce reliance on oil revenues. Sectors such as agriculture, manufacturing, and services should be the focus of targeted policy support.
"Enhance financial literacy to encourage the use of official financial channels and discourage reliance on the parallel market.
"Invest in infrastructure to reduce the cost of doing business and make Nigerian exports more competitive, provide incentives and easier access to finance for SMEs to boost local production and exports and implement a clear inflation targeting framework to guide monetary policy, aimed at achieving price stability."
He further said, "All government MDAs currently using the undervalued parallel market rate must immediately revert to the CBN determined rate of NCN800-850 for their USC denominated transactions, such as for payment of customs duties, etc. This will act as a major signpost that the government is serious about its decision to rein in and defend the naira. The CBN must continue to defend the naira in policies, words and action (money)."
On long-term strategies to address the challenges, Oye charged the CBN to "maintain consistency in economic policies to foster a stable environment for investment and economic planning.
"Build the capacity of economic institutions to effectively regulate and supervise the financial sector and enforce laws against economic sabotage.
"Undertake structural reforms to improve the business environment, such as streamlining business registration, enforcing contracts, and simplifying tax systems.
"Invest in education and healthcare to improve labour productivity and the innovation potential, and work towards increasing foreign reserves to buffer against external shocks, which can be achieved by improving trade balances and attracting foreign investment."
He stated, "Implementing these measures will require collaboration between various government agencies, including the Ministry of Industry, Trade and Investment, the Central Bank of Nigeria, the Ministry of Finance, and other relevant stakeholders. Additionally, it is important to engage with international partners, such as the International Monetary Fund (IMF) and the World Bank, for technical assistance and financial support where necessary.
"The overarching goal is to create a stable macroeconomic environment that fosters confidence among consumers and investors, ultimately leading to a stronger Naira and reduced inflation. Robust enforcement of regulations, economic diversification, and sustained institutional reforms are key to achieving these objectives."
"The importance of establishing an independent emergency financial intelligence committee with private sector leadership and government representation cannot be overemphasized because of Its certain potential to provide several benefits in the context of reining in the Naira and controlling inflation in Nigeria," Oye added.
In his letter to the Minister titled, 'Strategic actions to mitigate hyperinflation and uphold local and international agreements in the wake of naira devaluation," Oye said Nigeria stands at a crossroads where the convergence of economic prowess and policy prudence must be harnessed to ensure the well-being of our economy, the stability of the Naira, and the prosperity of our people.
He said, "The recent precipitous devaluation of the Naira has triggered hyperinflation, undermining both the citizenry and the business community. This situation has, in effect, breached the implicit contract between the Nigerian government and its people, wherein the government is entrusted with the stewardship of policies that safeguard against such economic volatility.
"The Ministry of Investment, Trade, and Industry, as a custodian of economic guidance and a sentinel against policy discordance, plays a critical role in steering the Federal Government towards adherence to local and international financial and trade agreements.
"It is imperative that the policies enacted by the Government do not frustrate the ability of private businesses in Nigeria to keep contractual agreements with their business partners. Also, that our Government's commitment with local businesses, bilateral/multilateral Institutions, the ECOWAS, the African Continental Free Trade Area (AfCFTA), and the World Trade Organization (WTO) agreements amongst others, are not contravened by Federal Government Policies."
To address the current economic challenges and honour our local and international obligations, the NACCIMA boss proposed the following steps: Fiscal Policy Stabilization, International Agreement Compliance, Currency Management Reassessment, Reinvigorate Agribusiness and Industrial Growth, Financial Sector Reform, Forward Contract Resolution and MDA Board Reconstitution
"It is our strong belief that if these recommendations are implemented, we will witness a turnaround in the country's fiscal and trade fortunes," Oye added.