New Telegraph

Forex: ‘Rent-Seeking, Arbitrage Counterproductive To Industrial Growth’

With more criticism trailing the Economic and Financial Crimes Commission (EFCC)’s arrest of some Bureaux De Change (BDC) operators following volatility in the country’s foreign exchange market, the Manufacturers Association of Nigeria (MAN) has also condemned the action, saying that the evil against the forex market is beyond BDCs.

The association indicated that it was not in support of total ban of BDC operations, rather, reduction in it number into large and well-established operators to curb their excesses.

Indeed, MAN posited that it was time for the government and the Central Bank of Nigeria (CBN) to curb the rising rent-seeking and arbitrage going on in the country’s forex market by Nigerian banks. The President of MAN, Chief Francis Meshioye, made this known to New Telegraph in Lagos.

He explained that the BDCs were not the problem but that government’s attention should also go to the rent-seeking Nigerian banks.

Meshioye explained that there was price discriminating monopoly going on around the country’s forex, saying CBN controls 85 per cent, while the autonomous market is 15 per cent.

According to him, prioritising the country’s macroeconomic stability with emphasis on moderating inflationary pressures, stabilising the exchange rate and boosting economic growth will require a good mix of fiscal and monetary policies.

Speaking further, the industrialist noted that the apex bank could do more in regulating the massive rent-seeking in the forex market.

He stated: “Surely, the CBN can work in sanitising this area to help forex inflow into the economy. It is our view and as a Nigerian, we believe that if government wants to do its things, it can do it effectively. “Just like our Nigerian Police Force, if the Police want to work, won’t they do it? They will do it.

But do they work at all times? No. So, if government wants to work on arbitrage or any other thing, they can do it. It’s doable. Do they want to control rent-seeking, it’s doble.

It could be minimised, almost put to a stop. “So MAN and other members of the OPS are urging President Bola Tinubu to find a mechanism to work on it. It can be done. It is a matter of deliberate efforts to do that.”

In particularly, the MAN boss pointed out that government’s foreign exchange policy reform, if effectively implemented, would “unlock inflows of capital into the economy, reduce arbitrage in the forex market and improve transparency in the forex allocation.

“Removal of impediments to market mechanism in allocation of forex will boost inflows from foreign direct investment (FDI), foreign portfolio investment (FPI), export proceeds and Diasporan remittances.”

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