Multiple Exchange Rates Affecting FDI in Nigeria, Says NESG
The Nigerian Economic Summit Group (NESG) has identified multiple exchange rates as one of the major barriers to attracting tangible foreign direct investment (FDI) to Nigeria.
The disclosure was part of a statement from the NESG board meeting held recently.
Part of the statement reads: “The failure to address the current situation of multiple exchange rates continues to reduce the much needed flow of foreign investment and official remittances from the diaspora.
“International investors, being sophisticated and rational, will not invest where there is a real risk to their ability to access and repatriate the proceeds of investment or where the functional currency sporadically depreciates. Multiple foreign exchange markets ( FX) with large price gaps creates room for speculation, back and forth, cronyism and outright corruption – with a negative effect on the economy,” the NESG said.
The group said there was no better time to harmonize exchange rates than now.
On rising debt, the NESG urged the federal government to “Return to debt sustainability in the face of declining revenues so as not to create a debt burden for future governments.
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He added that “Nigeria must prioritize spending, limit our spending to what we can support and eliminate waste and corruption in government. Governments, at all levels, should lead by example by drastically reducing governance costs (such as the costs of running legislatures, the proliferation of government agencies, etc.) to reflect the times of austerity we face »,
Speaking further, the NESG advised the federal government to come up with a sustainable strategy on how to remove subsidies, which have taken a heavy toll on the country’s revenue.
“The medium-term expenditure framework proposed by the federal government clearly indicates that the rising costs of fuel subsidies continue to exceed unsustainable levels. According to reports from the Federal Ministry of Finance, Budget and National Planning, it is clear that the debilitating impact of the current fuel subsidy regime on our fiscal fragility cannot be overstated.
“We urge the federal government to explore a systematic subsidy removal program that cushions the impact on our most vulnerable population through a well-coordinated and efficiently delivered welfare plan,” the group added.