CBN Governor Appears Before Lawmakers, Gives Reasons for Naira's Free Fall

CBN Governor Appears Before Lawmakers, Gives Reasons for Naira's Free Fall

  • The governor of the Central Bank of Nigeria appeared before the federal House of Representatives on Tuesday
  • The lawmakers invited him and two other ministers to explain the state of the country's economy and the falling value of the Naira
  • In his speech, Cardoso explained the measures taken by the CBN and outlined the path to reviving the Naira

Legit.ng journalist Dave Ibemere has over a decade of experience covering Tech, Energy, Stocks, Investments, and the Economy.

The governor of the Central Bank of Nigeria, Olayemi Cardoso, has explained that Nigerians' appetite for foreign products contributes to the Naira's devaluation.

He stated this when he appeared before members of the House of Representatives on Tuesday, February 6, 2024, in Abuja.

Naira to dollar exchange rate
CBN governor Yemi Cardoso explains naira depreciation Photo credit: CBN
Source: Facebook

CBN governor speaks on naira fall

Cardoso stated that Nigerians spend an estimated N$40 billion on education and medical tourism, equivalent to Nigeria's foreign reserve.

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He urged Nigerians to patronise local content to strengthen the Naira against the dollar and stabilise the economy and called for an attitudinal change towards foreign products.

His words:

“Given this data, it is crucial to highlight that between 2010 and 2020, foreign educational expenses amounted to a substantial $28.65 billion, as for the CBN publicly available balance of payment statistics.
“Similarly, medical treatment abroad has entered around $11bn in costs during the same period. Consequently, over the past decade, foreign exchange demand for education and healthcare has totaled nearly $40 billion.
“Notably, this amount surpasses the total foreign exchange reserves of the CBN. Mitigating a significant portion of this demand could have resulted in a considerably stronger naira today.”

The CBN Governor further projected that the number of Nigerian students abroad is set to surpass 100,000.

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He expressed concern that this trend will pressure the country's foreign exchange reserves more.

Cardoso also said that the economy needs export revenue to strengthen the Naira.

He further stated that the CBN intends to foster trust by maintaining stability in the foreign currency market and consumer pricing.

Expert speak

Reacting to the CBN governor's submission, especially on Nigeria's appetite for foreign goods, Yemi Kale, the former Statistician-General of the National Bureau of Statistics of Nigeria and now KPMG chief economist, asked the CBN to concentrate on boosting supply.

His words:

"The CBN governor should concentrate on boosting supply, not controlling demand, which he is already doing and should continue as data suggests improvement.
"We can’t really control demand in the near term without once again widening the FX gap and worsening confidence. Anytime we try to forcefully control anything, it often leads to an increase in its price."

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How CBN contributed to tumbling naira value, Peter Obi's ally Utomi speaks

CBN governor plans next move for naira

Earlier, Legit.ng reported that the CBN is set to introduce a singular foreign currency (FCY) gateway bank.

This bank will centralise all correspondent banking activities and facilitate international trade and economic activities.

The CBN is also planning to streamline the number of BDC operators in Nigeria, improve the nation's forex inflows and stabilise the Naira.

Source: Legit.ng

Authors:
Dave Ibemere avatar

Dave Ibemere (Senior Business Editor) Dave Ibemere is a senior business editor at Legit.ng. He is a financial journalist with over a decade of experience in print and online media. He also holds a Master's degree from the University of Lagos. He is a member of the African Academy for Open-Source Investigation (AAOSI), the Nigerian Institute of Public Relations and other media think tank groups. He previously worked with The Guardian, BusinessDay, and headed the business desk at Ripples Nigeria. Email: dave.ibemere@corp.legit.ng.

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