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2023: Peter Obi reacts to discussions on forex reforms, CBN independence

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2 years ago

October 13, 2022

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Presidential candidate of the Labour Party, Peter Obi has pledged to reestablish the independence of the Central Bank of Nigeria (CBN) as well as forex reforms to strengthen the Naira.

In a series of posts on Twitter on Thursday, Obi pledged to end the country’s multiple exchange rate regimes if elected.

Obi, whose candidacy has strong support from Nigeria’s largely youthful population and the middle class especially in the southern part of the country, said the independence of the CBN will be re-established while a credible and transparent plan to normalize the exchange rate and bring inflation to single digits will be pursued.

Nigeria operates multiple exchange rates dominated by a tightly controlled official rate and a parallel market, where the naira is freely traded. Many people use the unauthorized market where the naira is almost 70% weaker against the dollar.

The depreciation in the local unit has fanned annual inflation that’s at a 17-year high of 20.5%.

The government has resisted calls by the World Bank and the International Monetary Fund to merge the rates by allowing a more flexible foreign-exchange regime.

“This multiple exchange rate regime encourages capital flight and deters investment, which has further worsened Nigeria’s forex situation,” Obi said.

The current foreign exchange policies penalize exporters as it forces them to sell their dollars at rates they are unable to get when they need the greenback from the central bank, Obi said. “We will remove import and forex restrictions and insist on a single forex market.”

Obi has an uphill battle to win the presidency against more established candidates including Bola Tinubu of the ruling party and Atiku Abubakar of the main opposition Peoples Democratic Party.

Both parties have dominated the Nigerian political scene since 1999 when the country returned to democracy after decades of military rule.