To ensure further stability in the foreign exchange market, Nigeria needs to unify its exchange rates, the International Monetary Fund (IMF) has advised.
The Director of African Department, IMF, Mr. Abebe Aemro Selassie, gave this advice at a press briefing on Africa.
Africa’s biggest economy has, at least, four exchange rates, which include one for Muslim pilgrims going to Saudi Arabia, another for oil marketers, rate for foreign travel and school fees, in addition to the official market rate.
Nigeria had battled a currency crisis brought on by low oil prices, which tipped her economy into recession and created chronic dollar shortages.
Selassie, however, acknowledged and welcomed the measures taken by the Central Bank of Nigeria (CBN) to ensure relative stability in the foreign exchange market.
Selassie said, “Of course, compared to a year ago, things have improved significantly in Nigeria.”
He added, “This was due to the reforms that have been undertaken in the exchange rate regime as well as capital inflows due to the recovery in oil prices and the uncertainty of ameliorating it.
“Inflation has also been decelerated. These are all welcome trends. But I do think that there remains a need to move towards having a more simplified exchange rate regime, moving forward.
“That would also be important for the conduct of monetary policy.”
Besides, he welcomed the recently signed continental free trade agreement (CFTA) by some African leaders in Kigali, Rwanda, last month, saying it holds a lot of promise for the region.
“We strongly welcome the CFTA that was recently reached in Kigali. Just to step back a little bit, you know in recent years, we have seen a significant improvement in intra-Africa Trade as it has gone up from below 10 per cent to now almost 20 per cent of the region’s trade,” he said.
“And what’s interesting about trade is that much of what Africa trades with each other tends to be more manufacturing type goods, exactly the kind of diversified exports that our countries are seeking.
“So we think that the CFTA, when fully implemented, coupled with reforms in non-tariff barriers, facilitating infrastructure to allow goods to move to each other should facilitate and encourage and help connect markets, deepen and expand the markets which countries can trade, so we strongly welcome the CFTA.”
Responding to a question on the likely effects on countries such as Nigeria that opted out of the agreement, the IMF official said: “Trade agreements always have difficult issues and more domestic issues for and against. But overall, we think that the CFTA is a very important initiative, which many African countries will benefit from.”
He stressed the need to increase revenue mobilisation in the country, saying the country should target a 10 per cent tax to Gross Domestic (GDP) ratio.
“Why this is necessary is to be able to address the tremendous investment needs in education, health and many other priorities that the government has,” he said.
So, it’s not really revenue collection just for revenue collection sake but the development objectives that the government itself has laid out.
“The challenge in Nigeria has been a relative source of revenue. There has been less emphasis on tax collection. So, enhancing tax collection is important.”
.new telegraph
