The Central bank of Nigeria tries to save naira’s exchange rate from dive but its efforts led to completely unexpected catastrophic results for Nigerian businesses.
Buhari does the same step in import restrictions as in 1980s – and gets the same devastating results
Extreme measures by the CBN backed by Muhammadu Buhari to keep naira’s exchange rate afloat are killing the existing businesses in Nigeria instead of boosting domestic production as it was expected.
To stop naira’s further devaluation and to encourage local manufacturing the central bank has banned Nigerian companies to buy for dollars a vast variety of foreign goods ranging from glass to oil and tomatoes.
READ ALSO: Buhari Still A Military Dictator – Prof. Ben Nwabueze
However, this policy approved by Muhammadu Buhari as a part of a plan to boost local economy has led to the opposite results.
Many local companies found themselves on the verge of shutting their businesses due to inability to supply their productions with much-needed imported raw materials – and they are not able to find the substitutes at home either. Besides that Nigerian business are not able to buy foreign currency in quantities needed to comply with the contracts.
“Many companies have defaulted on fulfilling foreign obligations … even blue chip companies … for the first time,” told the press Muda Yusuf, director general of the Lagos Chamber of Commerce, adding that many firms lost their credit lines due to inability to get foreign currency in time to fulfil the terms of the contracts.
Some top executives in Nigerian companies confirm that it can take more than 10 days to get dollars from the CBN, and the central bank is not able to satisfy the demand in foreign currency fully – and that leads to catastrophic results.
While ruling Nigeria as a military leader in 1980s Muhammadu Buhari already imposed restrictions on imported goods and that measures led to the same catastrophic results in economy, slowing its development and destroying businesses largely dependent on import.
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However, adepts of import ban believe that these measures will eventually lead to the development of local businesses.
Meanwhile, some prominent economists doubt that strict regulations of imports and restrictions on exchange market will lead to the desired results.
“Nigeria has had substantial experience with similar import-substitution policies in the past,” told Razia Khan, chief economist at Standard Chartered Bank, adding that “rarely have they succeeded in creating a vibrant, competitive industrial sector, with the capability of creating the employment growth that Nigerian demographics otherwise demand.”
It is not a secret that nowadays the Nigerian currency suffers a serious pressure because of numerous factors and blackouts. However, the federal government is trying to fix the Naira at a stable exchange rate.
The Central Bank of Nigeria (CBN) has published the statistics which show that huge amounts were spent by the bank to support the naira.
According to the available data, the CBN sold about $200millon daily for some month. That measure means that the currency amounts were sold from state reserves. After that the government was able to form the official rate.
On August 17 bank customers criticised a new attempt of the Central Bank of Nigeria (CBN) to stabilize the naira.
Numerous customers in interviews with the News Agency of Nigeria (NAN) expressed disappointment with the ATM withdrawal limit policy
Earlier the Central Bank of Nigeria (CBN) has warned individuals and corporate organisations against the use of foreign currency to carry out transactions in the country.
Besides that, The Central Bank of Nigeria (CBN) stated that any exporter that uses export proceeds for non-eligible transactions will be barred from the foreign exchange market.
The post CBN’s Efforts To Save Naira Backed By Buhari Destroy Nigerian Businesses En Masse appeared first on Nigeria News today & Breaking news | Read on NAIJ.COM.
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