Tinubu’s policy on exchange rate, inflation ‘ll determine financial service growth—Expert

The Chief Executive Officer of Cowrywise, Mr. Razak Ahmed, says tackling the dwindling fortune of the Naira at the forex market and rising inflation remain critical to the growth of the financial service sector under the new administration of President Bola Tinubu.

Recall that President Tinubu in his inaugural speech affirmed that the Central Bank of Nigeria (CBN) under him will aim at harmonising Nigeria’s multiple exchange rates.

Pursuing a single exchange rate, President Tinubu disclosed, will help divert funds away from arbitrage into productive endeavours such as investment in plant, equipment and job creation.

Speaking at the second quarter of 2023 Economic Outlook Webinar, Ahmed said tackling these two factors will not only increase the existing opportunities within the financial service industry, but it will enhance the realization of those opportunities as quickly as possible.

“The exchange rate is the primary linkage between any economy and the rest of the world. And because the world today is globally interconnected, if your exchange rate is extremely volatile, what you’ve done technically is you’ve injected volatility into how your economy is linked to the rest of the world. You want to ensure that stability because stability is what will engender the flow in or out of the country.

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“Inflation has long-term implications on what the purchasing power of an average individual will be. And it has long-term implications for what people will eventually buy and the various sectors where they are purchasing from. So, if the Tinubu administration can tackle key macro indicators like exchange rates, inflation, and interest rates, I think it will not only increase the existing opportunities within the financial service industry, but it will enhance the realization of those opportunities as quickly as possible” he said.

“There are structure opportunities that exist and they will continue to exist by the state of our economy, by our population, or more importantly, by the level of penetrations of key financial service indicators, right from credits to payments to the number of people who have bank accounts, and the number of people who have access to basic financial services. Those indicators are still pretty low right now.

“So, even when you look at the size of the size of players in the financial services ecosystem in Nigeria, say for example, the average size of Nigerian banks compared to say an average bank of banking in Egypt or South Africa, they’re still pretty small, not talk of when you compare them with banks in more developed countries. The indicators of financial service provisions are still very low.”

He added that to realize these existing opportunities the new administration will need to put in place the right policies that will stabilize the exchange rate and address the current rising inflation.