By Odunewu Segun
A research analysts at FXTM, Lukman Otunuga, has said certain external and internal factors may pushed the naira beyond the N500 mark to a dollar before the end 2016 if adequate measures are not taken promptly.
He said the dollar may continue to strengthen against the Naira, because the U.S is working to strengthen its currency too. If this continues by year end naira may exchange for N500 to a dollar at the black market and N400 official rate.
“If you look at the Naira the official rate today now is trading around N360 to $1 while the black market is around N440. So, I think even now, the Naira could be open to further losses, due to stronger dollar and weaker oil prices.”
Otunuga said that the depreciation in international oil price is principal among factors affecting the naira due to the mono-economic nature of the country. “If we consider the fact that about 95% of export revenues and 70% of government revenue in Nigeria come from oil revenue, then you can understand why the nation has been under pressure. So, what has happened to Nigeria is both external and internal.”
According to him, Nigeria is heavily oil dependent, arguing that even though the dollar is not the legal tender in Nigeria, it has a strong grip on the economy. “Therefore, when you consider the global oil market and the dollar issues, they combined to put Nigeria under pressure.”
He said diversification is the best way to get out of the recession, and also to boost the naira, stressing that agriculture poses the best benefits if harness because it would reduce food importation and government could export the surplus.
“When you look at agriculture, manufacturing, technology and building of infrastructure will help Nigeria live beyond oil exportation. For instance, in the West they produce oil and refine it instead of exporting crude only to import as oil later. So, this is something that can take years to achieve; I think four year minimum.”
He also urged govt to invest in infrastructure in other to galvanise economic growth. ”Tourism could also be a huge industry to help in diversifying the economy. Let the government invest on roads to boost transportation of those agricultural produce and power. Power will enable SMEs heave sign of relief too and spring up surprises in technological advancements,” he added.