Forex Crisis: Nigerians have to change their tastes – Expert
Following the ongoing crisis on foreign exchange (Forex) in Nigeria with the continuous fall of the Naira against the US Dollar, Nigerians would have to modify their tastes as part of measures to address the pressing deficits, an expert in international trade and financing, Mercy Femi-Olagundoye has said.
Femi-Olagundoye, who recently bagged the Rising Leader Award at the Trade, Treasury and Payments Awards 2023 by Trade Finance Global in collaboration with BAFT in Toronto, said Nigeria’s foreign exchange crisis is the end result of the country’s international trade standing lying largely on the demand side with huge deficits on the supply side.
She submitted that to strike a balance, Nigerians would have to modify their tastes to shift towards consuming much more local products while producing more export-valued products to boost Forex inflow.
“For the country, we need to address our taste. We consume what we do not produce, we produce what we don’t consume, and because the demand for foreign products is far more than what we are exporting. There is always a gap, and the pressure on the exchange rate would continue when there is such a gap.
“It is simple economics; when demand is more than supply, the price will continue to rise,” she explained.
On how to reach equilibrium, she submitted, “We need to increase our supply side and reduce our demands. We need to do with what we are producing in Nigeria. What we spend our foreign exchange on is very high, including services. For instance, on education for foreign schools, we pay a lot. We spend a lot on personal travels. Those are part of the things we need to reduce to make FX available for the real sector, the manufacturing sector.
“Looking at the supply side, we need to do more exports. What we are doing currently is not matching forex needed for import. So, we need to support exporters. We need to encourage exports.”
Femi-Olagundoye, who is Group Head, Trade Finance & Trade Processing, Treasury Operations, Cross Border Payment and Domestic Bank Operations at Wema Bank, said financial institutions need to understand the dynamics of exports and the technicalities to address the situation.
She said that though the CBN has made some efforts through the Investors and Exporters FX Window, the government and every stakeholder must encourage exporters to do more.
“When we have proceeds coming in, we are boosting our supply side,” she said.
Speaking on the need for Nigerians to appreciate more local products for use, Femi-Olagundoye said, “Our taste is for everybody. It’s not mainly the government. We would help the local manufacturer. We would provide jobs, and the foreign exchange we are spending would be conserved. So, we need to modify our taste so that we can reduce the demand side, as well as support our exporters on the supply side. If we do these, the exchange rate will come down; even if it may not be equal, it won’t be as high as we have it today.”
Speaking on the feat of the award, she said it was a delight Nigeria was represented for the first time in the recognition while saying it also gave credence to gender representation.
“Putting Nigeria on that level was very exciting, and apart from that, I also felt very great based on gender balance. For a woman to get that award is very exciting and encouraging to the young professionals, especially the females,” she said.
