“Greater inflow of dollars would help reverse step-by-step, all the missteps that had been taken in the last 18 months and get capital back.
“We need to encourage the central bank to have the courage to take that risk of implementing that document of actually going into that flexible exchange rate. Let the market work for two or three weeks and see how it will perform and you are going to have a gradual narrowing of the gap between the interbank and the parallel market rates and more liquidity in the system,” he said.
He also advised the federal government to sell down some national assets in a manner that does not hurt its strategic interest.
“We need to sell down some oil assets and sell down some refineries in a transparent manner that gives you value. You can even have the option of buying back later. But basically it helps you raise revenue,” the former CBN governor said.
Earlier, during a panel session, Prof. Pat Utomi said it had become the tradition that a new government in the country would allow things to get worse before they learn rather than building a consensus that allows the country to forge development that is sustainable.
He stated that Nigeria has a crisis of leadership. “We must be able to show a clear game plan, with some critical elements of industrial policy in areas of competitive advantage, which would be self-explanatory and attractive to investors.
“Government must be responsive to signals and not let things go out of hand before seeking out solutions and these have eluded successive governments,” Utomi said.
Also, the CEO of the Economic Associates, Dr. Ayo Teriba, pointed out that Nigeria was facing its economic challenges because of its over dependence on inflows from portfolio investors and export proceeds.
“We must learn from India that relies heavily on Diaspora remittances, which are directly invested on sovereign assets, thus providing the needed foreign exchange. We must broaden the focus, not only on foreign investors, but with confidence building policies to attract the Diasporans,” he added.
OTHER EXPERTS BACK CBN
Other than Sanusi and the panellists at the forum held by Afrinvest, several other international and local financial experts also threw their weight behind the CBN’s decision to leave the MPC unchanged.
Staunchly supporting the CBN’s action, financial experts and market analysts contended that the decision would ensure continued foreign inflows which, according to them, was what the country needed most at this time to pull it out of economic recession.
An economist at Exotix Partners, a leading investment firm for frontier and illiquid markets based in the United Kingdom, Alan Cameron, supported the CBN’s decision, describing it as one of the regulator’s “most sensible statement in months (and) one clear about the mandate and policy limitations”.
He believed that the naira was no longer over-valued, but rather at fair value on a real effective exchange rate basis – or perhaps significantly below (325-350 locally).
He said it would take another three to six months of high nominal yields before some cuts in 2017, if external dynamics continue to improve, noting that the MPC statement “should be confidence-building, albeit from a rather low level”.
Similarly, Senior Macroeconomic Specialist at Ecobank International, London, Gaime Nonyame, supported the rate retention by the banking system regulator.
She said the CBN could not reduce the policy rate because of inflation and could not afford to increase it because the country was already in recession.
This, she insisted, would not be desirable and encouraging to investors, who are expected to bring in the much-needed foreign currency, which Nigeria needs to get out of recession.
Also, analysts at the foreign currency trading and investment arm of Diamond Bank Plc, Uyi Ohenhen, lauded the CBN’s action. He said it was a positive development that triggered the inflow of funds into the foreign exchange market Wednesday.
One of the economists that spoke with Reuters also praised the CBN for shrugging off political pressure.
“CBN’s refusal to bow to government pressure was a notable sign of the institution’s independence,” said John Ashbourne of Capital Economics.
A Senior Analyst at Delta Investments, Mr. Ken Halim, said: “The CBN’s decision was generally in line with analysts’ expectations. I would have been surprised if the CBN had cut interest rates given that the most serious challenge facing the country at the moment is the forex issue.
“Dollars are still very scarce and companies are shutting down because they can’t access FX. Cutting interest rates would have been counter-productive and discouraged foreign investors from investing in treasury bills and bonds.”
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