The House of Representatives decried that while the Nigerian currency was losing value, others in African were appreciating. The House has therefore asked the Central Bank of Nigeria to urgently put in place a policy to check further devaluation of the naira to the United States dollar and other international legal tenders.
The motion moved by the Deputy Chairman of the Committee on Pensions, Mr. Bamidele Salam, which warned the CBN of the implications of further devaluing the naira was unanimously adopted at the plenary on Wednesday.
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Salam recalled that while addressing the Bankers’ Committee at a summit on the economy in Lagos earlier in February, the Governor of the Central Bank of Nigeria, Godwin Emefiele, informed the committee about the naira devaluation against the dollar.
The lawmaker also quoted Emefiele as saying at the summit that the official exchange rate stood at N410 to the dollar.
“That is 7.6 per cent weaker than the rate of N379 published on the central bank’s website,” Salam noted.
According to the lawmaker, while the value of the naira relative to the dollar had declined by nine per cent in the last six months, the South African rand and Ghanaian cedi had appreciated by 11.4 per cent and one per cent, respectively.
He also recalled that the CBN adopted multiple exchange rates in 2020, in a bid to avoid an outright devaluation.
Salam noted that the official rate used as a basis for budget preparation and other official transactions differed from a closely controlled exchange rate for investors and exporters known as the Nigerian Autonomous Foreign Exchange Rate Fixing Methodology.
He stressed that the naira had traded in a tight range between N400 and N410, while the NAFEX rate was different from the parallel market, considered illegal by the CBN, where the naira closed at 502.
Salam emphasized that devaluation is likely to cause inflation because imported goods or raw materials will be more expensive causing demand-pull inflation. to
He said “The concern is that the long-term devaluation may lead to lower productivity because of the decline in incentives.
“The House is further concerned that devaluation of the naira makes it more difficult for Nigerian youths especially in the IT sector, whose businesses are online and must necessarily transact businesses in the US dollars.
