The Chartered Institute of Bankers of Nigeria (CIBN) has lauded President Bola Tinubu’s efforts to unify the Naira exchange rate, a crucial step to safeguard the nation from impending financial turmoil.
Speaking at the 2023 Lagos Bankers Night themed “Exchange Rate Unification: Glocal Implications, Organisations, and the Country,” Dr. Ken Opara, President and Chairman of the CIBN Council, expressed his commendation during the event held in Lagos on Friday evening.
Opara highlighted the institute’s consistent advocacy for transparency and a free market approach, allowing the interplay of supply and demand to dictate exchange rates.
“The Chartered Institute of Bankers of Nigeria stands firmly behind the Central Bank of Nigeria’s reforms, particularly the exchange rate unification and other measures aimed at establishing the genuine value of the Naira,” Opara stated. He added that distinguished scholars like Dr. ‘Biodun Adedipe, along with Mr. Laoye Jaiyeola of the Nigeria Economic Summit Group, convened at the Bankers House during the week to applaud this reform, particularly the unification of exchange rates.
He pointed out that the Central Bank’s initiatives had already started yielding positive results, as the Naira-to-dollar exchange rate began to decrease, underscoring the well-thought-out and beneficial nature of this initiative.
Opara shared that the CIBN had recently conducted a half-year economic review, where prominent figures from various industries voiced their support for the reform.
He encouraged Nigerians to seize the opportunities presented by this reform, asserting that challenges often conceal opportunities.
Opara pledged the institute’s unwavering commitment to contributing suggestions and insights towards supporting the nation’s growth. “As a standard in our industry, we have fulfilled this role effectively during times of industry challenges, and we will continue to do so because we firmly believe that the banking industry is solid, stable, and efficient,” he affirmed.
He praised the payment system in Nigeria as “the best” globally, highlighting its capability to facilitate real-time online transactions.
Furthermore, Opara debunked media reports that alleged the Lagos branch of CIBN was opposed to exchange rate unification, terming such claims as “unfounded” and likely to induce panic.
Dr ‘Biodun Adedipe, Chief Consultant of B. Adedipe Associates Ltd. (BAA Consult), addressed the exchange rate unification process, noting its historical trajectory in Nigeria. He presented an expert perspective, delineating how such unifications have been undertaken previously under various appellations like devaluation, correction, alignment, and depreciation.
Adedipe underlined the importance of curbing disparities between official and parallel market rates through a managed float approach. He emphasised the value of maintaining a limited premium to discourage speculative activities and ensure adequate liquidity.
He provided historical context, revealing that successful rate convergence occurred when Nigeria held substantial external reserves. He noted that during premium removal episodes, it took an average of two to six weeks for parallel market rates to diverge from the official rate, often due to uncertainty about a consistent supply.
President Tinubu’s announced his commitment to consolidating the disparate exchange rate regimes under a unified system during his May 29 inauguration. Subsequently, in June, President Tinubu, through his spokesman, Dele Alake, declared the implementation of a unified exchange rate to avert an impending financial crisis. This managed float approach, akin to his strategy for fuel subsidy removal, was deemed the best course of action for Nigeria’s interests.
