By Matthew Denis
The Head, Group Corporate Bank & Chief Operating Officer, Corporate & Investment Bank, Ecobank Transnational Incorporated, Dr. Bunmi Bajomo has disclosed that an uncontrolled inflation will continue to affect Nigeria Foreign Exchange rates negatively.
She made the disclosure while being featured as one of the panelists at the ongoing 16th Annual Banking and Finance Conference in Abuja on Tuesday.
Dr Bajomo, an experienced economist and financial expert, with over 20 years of work experience said “an uncontrolled inflation will affect our exchange rate negatively.”
“So if we know we want to stabilise and improve our forex exchange rate then we must control the inflation but the inflation cannot be controlled by just jacking up the exchange rate.
The Expert stressed that Nigeria is not a credit economy therefore if the exchange rate is increased it doesn’t affect the disposable power of the average citizens.
She suggested that what will change the dynamics because we don’t borrow to spend on consumer items but we borrow to invest.
“So if we increase the interest rate we continue to hurt the SMEs and commercial SMEs. We need to create a special instrument we don’t interest rate in a blanket way but create a special instrument for the investing Community like the disposal Community to attract their Investment.
“Engage the international organisations like I said because all of these trade maybe are taking place elsewhere, let us engage and bring them into the system.
“Unban the prohibited items let people legitimately source for the materials they need in the legitimate market and let there be a forward Guardian Communication for the regulatory Authority embedded in our culture saying this the cause of action that we want to take.”
The Ecobank COO stressed that another aspect that contributed to the setback in the economy was disagreement in the forex market with the international organisations which they folded their operations in Nigeria.
She said, “We also went on exchange disagreement with the international Organizations in terms of their activities in the forex market. They have operations in Nigeria and they must fund those operations and they’re trying to get capital from their country to fund the operations but you said no you don’t like their activities directing them to come and unveil their ownership. These are international Organizations they are not subjected to these activities so alots of them exit the space.
“So we also limited our sources of FX and we have done all of these why do we expect things to be normal and we then say we are changing course to maintain an unothordox monitoring policy by floating our exchange rate that’s fine but the approach we may agree and we may not agree.
“In doing this, we say we are floating but there is no policy guardian which is the part the Central Bank of Nigeria (CBN) will have to take whether it has intervene or not.”