Economist: Don’t Devalue Naira to Close Gap between Official, Parallel Forex Rates

Dike Onwuamaeze

An Economist and the Chief Consultant of B. Adedipe Associates Limited (BAA Consult), Dr. Biodun Adedipe, has warned the Central Bank of Nigeria (CBN) against devaluing the Naira to close the gap between the official and parallel foreign exchange rates.

Adedipe insisted that “devaluation and rate adjustments will be an unending circle that will make corporations (companies) and households poorer. The enduring solution to the widening gap between the official and roadside rates is pragmatic measures to address structural deficiencies” in the economy.

He emphasised that devaluation in Economics is strictly to “make a country’s exports cheaper and not to close the gap between official and parallel markets’ rates.”

Adedipe gave this warning last week when he presented a paper as the keynote speaker at “2023 Economic Outlook” that was organised by the Association of Corporate Tresurers of Nigeria (ACTN), where he projected a positive Gross Domestic Product (GDP) growth of more than 3.19 per cent in 2023 for Nigerian economy due to expansion that would take place in the domestic production capacity in refined petroleum products, rice, consumable goods and automobile.

He noted that 2023 would be characterised by restrained growth in the oil and gas sector, softened growth in agriculture, persistent fuel and foreign exchange scarcity and weak fiscal position.

Adedipe also forecasted that inflation rate would moderate in 2023 but would still remain at double digit. He told economic agents in Nigeria to “expect 18.2 per cent inflation rate while lending rate will also remain at double digit to respond to the rate of inflation.”

The renowned economist said that “we expect the economy to rise over the next six months on accelerated manufacturing activities” and called for focused export promotions activities that would bring some measure of stability to the Naira in the exchange rate market.

According to him, the exchange rates during the year would be at about N480 per US Dollar and N705 per US Dollar at the official and parallel markets respectively.

He added that improvements in infrastructure developments across the country as a result of the government’s targeted investments in rail, roads and aviation would begin to impact positively on the cost of doing business in the country.

The President and Chairman of Council of ACTN, Ms. Victory Olumuyiwa, in his welcome address said that this is the association’s 7^th edition of economic outlook “that is designed to manage information and share perspectives on the outlook for the Nigerian economy concerning the business community as long as the financial markets hoped the 2023 will be.”