The United States (US) government has revealed that it will press Nigeria in talks this week to adopt a more flexible foreign exchange rate to boost growth and investment in the country.
Speaking to an audience at the United States Institute of Peace, n Monday, U.S. Assistant Secretary of State for Africa, Linda Thomas-Greenfield, said Nigeria should ensure the value of the naira currency versus the U.S. dollar was realistic.
Thomas-Greenfield who spoke ahead of talks in Washington, on Thursday, involving officials from the State Department, Pentagon and Treasury and their counterparts in the Nigerian government said:
“While most people complain about the possibility of there being a devaluation, people are already operating on a devalued currency, and the only people who are not, are people who are doing it officially
“Our recommendation is, and we will have discussions about it, that they should look at the exchange rate and try to make the exchange rate more realistic to what the value of the naira is to the dollar”.
She said the parallel currency market in Nigeria was ‘alive and well,’ but warned of a rigid exchange rate, capital controls and import bans could undermine the President’s efforts to expand economic growth and fight corruption.
“Capital controls that limit access to foreign exchange rewards insiders and undermines the stated goals of Nigeria to increase domestic production because both Nigerian and expat investors alike tell us many businesses are unable to obtain the capital to purchase badly needed intermediate goods.”
Nigeria is currently facing its worst economic crisis in decades as a result of the falling price of oil which has slashed revenues, with the naira trading some 40 percent below the official rate on the black market versus the dollar.
The central bank pegged the exchange rate to curb speculative demand for the dollar and protect foreign exchange reserves, which have fallen to an 11-year low.
The International Monetary Fund (IMF) last month called on Nigeria to lift the curbs and let the naira reflect market forces more closely, as the restrictions have significantly affected the private sector.