Remove Economic Subsidies, ABCON Tells FG

A money changer holds Turkish lira banknotes next to UA money changer holds Turkish lira banknotes next to U.S. dollar bills at a currency exchange office in central Istanbul April 15, 2015.
  • Remove Economic Subsidies, ABCON Tells FG

The Association of Bureau De Change Operators of Nigeria has called for elimination of fuel and foreign exchange subsidies in order to address structural defects in the economy.

The association made this call in its quarter economic review report for the second quarter of 2019.

In the report, it said these subsidies represent structural defects in the nation’s economy.

Speaking at the presentation of the report, the President, ABCON, Alhaji Aminu Gwadabe, said, “The subsidies are misapplications which have resulted into creation of economic rents in various dimensions, as well as maladjustments in sectoral business structures, creating hyper unemployment rates which had triggered unmanageable social unrest like kidnappings, terrorism, banditry, armed robberies and large scale cultism among others.

“We recommend that government should consider the following: Policy of single exchange rate to completely remove foreign exchange economic rent and subsidy for a medium and long term adjustment of the economy from distortions occasioned by decades of subsidy.

“We must observe that we have an inefficient structural system to track surreptitious flow of foreign exchange within the platforms notwithstanding, that the morals to control are lacking.

“This head of a hydra of fuel subsidy issue should be addressed headlong by critically re-organising the sub-sector including deregulation and decentralisation of fuel importation to ensure competition which is necessary to guarantee fair price.”

Stressing the need to tackle the challenge of youth and graduate unemployment, ABCON called for an extension of the National Youth Service Corp period from one year to two years, with provision to allow discharge after one year if employment had been secured.

The association commended the Federal Government for signing the Africa continental Free Trade Agreement, but called for measures to enhance the competitiveness of local industries to maximise the benefits of the agreement for the economy.

ABCON also welcomed the proposed consolidation of the banking sector with new minimum capital requirements, describing it as, “a necessity that will help in reducing the impact of non-performing loans on Capital Adequacy Ratio of banks and thus enhance their capacity to lend to the economy.”

Speaking on ABCON’s efforts to enhance stability in the foreign exchange market, Gwadabe said that the association would leverage on its partnership with the Nigerian Diaspora Commission to harness the potential of the diaspora remittance to enhance foreign exchange inflow and economic development.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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