Nigeria Economic Summit: FG To Digitalise Forex Market Wale Edun Hints

A comprehensive review of the foreign exchange market is being planned by the Federal Government, Minister of Finance and Coordinating Minister of Economy Mr Wale Edun hinted on Monday.

The Minister said about $10 billion forex inflow is expected soon and expressed hope that it will deepen forex availability in the country.

Contributing to a discussion panel at the 29th session of the Nigeria Economic Summit yesterday, Edun said the upcoming forex review will entail digitalizing the forex market for efficiency.

” As part of a wider review, there’s a revamping of the foreign exchange market such that the foreign exchange market will be simplified, digitalized and it will be reformed such that, all legal and legitimate transactions will fall within the purview of the authorities and a formal market. Anything outside that will be an illegal and criminal offense, and will be punished”, Edun declared.

Continuing, the minister said the reform will be robustly followed up so that, ” if you want to pay school fees, if you want to pay a health bill it will be simplified. And you’ll be able to just provide perhaps an identity such as a BVN, NIN and you do your transaction. It will be formal, but you’ll be a price-taker. Right now, the tail is wagging, the dog. A marginal transaction by you to pay school fees will not now change the foreign exchange rate because that will be determined just like in a stock exchange”.

The Minister recalled the President’s declaration to take measures to deal with the illiquidity in the foreign exchange market, which he noted was very problematic at this time. “The market is illiquid, it’s not functioning properly because there is not enough supply of foreign exchange and there are various reasons for that. The solution that Mr. President has put on the table is number one, he has signed an executive order that effectively legally allows under forbearance all the cash that is in the domestic economy to legally come into the formal money supply. People will be able to take the cash that they have and put it inside the system. Along with that, there’s another executive order that allows to domestic issue of foreign currency instruments, so that they will have an incentive to provide that foreign exchange from whatever source into income bearing instruments”.

In his contribution at the session, Governor of the Central Bank of Nigeria ( CBN) Dr. Olayemi Cardoso
justified forex exchange unification regardless of its glitch. He said that given the steps taken so far, the benefits of reforms will trickle down soon.

“The attempt at unification of the foreign exchange market may not by any means perfect, but at least substantially more revenues have come in. So the combination of those two things in addition, to some of the other efforts that are being done on the fiscal side, in due course, we will see the outcome. There are more difficult decisions to be made, no question about it. But the two very difficult decisions — painful — they’ve been taken and now it is a question of managing things to get to where we really want to get to”, the CBN governor said.

Giving the focus of the forex regime being targeted, the CBN governor said: “Where we really want to get to, is a place where we have a foreign exchange market that is fit for purpose. A foreign exchange market that works for everybody, where, you know the rules, where there are no policy flip flops, where you can predict. That’s the bigger deal. That is what we need to do”.