ECONOMIC ANALYSIS: Nigeria’s FX Control Pushes Foreign Investors to Egypt (By Akinrinde, Ibukunoluwa Jeremiah)

Email: ibukunoluwaakinrinde@gmail.com

Twitter: @IbukunoluwaIbk

Press release opines that the Federal Government’s (FG) control of forex rate could divert the focus of foreign investors to Egypt — the third largest economy in Africa. The rigidity of Nigeria’s forex system and the prevalent forex scarcity have led to an increased margin between the official rates (N197/$1) and the parallel market rates (N320/$1) — a 62% margin compared to Egypt’s 15% margin.

Nonetheless, the FG is of the position that a regulated foreign exchange regime will preserve the value of the naira. If the government devalues the forex regime, it could lead to extreme imported inflation for essential import commodities like PMS, diesel and kerosene; pending when our refineries meet domestic demand. This would have an inflationary pass-through effect on transport cost, food cost, cost of doing business, cost of living, etc.; thereby worsening the ease of doing business and the standard of living. Without making significant forex reforms, the problem of forex scarcity can primarily be resolved by generating revenue from exports.

4odvQ9T����G?�