- ‘We Need Policy Re-Alignment to Support Our External Reserve’
As part of measure to improve Nigeria’s external reserves, a financial expert has advocated the need for clarity and proper re-alignment of monetary policies of the Central Bank of Nigeria (CBN) and what the federal government plans to do to grow the reserve and improve the pace of economic growth.
The advice was given by the Executive Director of FSDH Merchant Bank, Olufunsho Olusanya, during the sent-off party organised in honour of the out-going Managing Director, Mr. Belo-Osagie.
She stated that the three arms of government need to come together and see what ought to be done in strengthening the growth of the reserves, while striving to harmonise what the federal government is currently doing to move the economy forward.
“There should be clarity of policies as regards what the CBN and the FG wants to do, otherwise everything will be speculations. As Nigerians, we need to talk up ourselves and change that orientation that people can’t do business in Nigeria and down play negative things,” she mentored.
Olusanya explained that if the country had saved N200 billion in the reserves, the country will not be experiencing recession, adding that the CBN has done what it is expected to do, therefore for the country to get foreigners to invest, there is need to have attractive yields in the money market that they can invest in. “Our Stock Exchange Market (SEC) needs to be working effectively so that they can see value of growth in the stock market. They also need to see stability in some of our policies, for them to start putting their money back.”
The FSDH Executive Director further noted that although the interests’ rates for treasury bonds are very attractive now, the challenges getting foreign investors come back to the country.
She added: “We have seen a growth of about 2billion in our reserves which is very commendable. If we make a projection that we are able to grow one billion monthly. Then there will any need for us to borrow, and can we keep up that standard to meet all our requests. The problem we are seeing in the banking sector is shortage of forex. We have customers we want to do much transaction but we have shortage of FX.
“Most banks that were doing trade transactions in billions have significantly dropped to 20 percent. Everything is interconnected. If I meet your forex requirements, you will be able to generate more revenues and they grow the value chain, which will translate to other things. In 2017, we will notice an improved growth. The International Monetary Fund (IMF) has predicted has a growth of 0.5 and 1 percent which is better than a negative growth.
“If all these should happen we should see better results for the country and for the sector as well. The best way to build reserves is to generate enough revenue and sustain it. We have a situation where the whole country needs so much FX to maintain normal operations, but that is not there. The foreign investors that brought money into the economy take their money out and each time they do that it puts pressure on our reserves.”