Tinubu Vows to Clear FX Backlog, Says $1tn Economy Feasible By 2026

•Targets completion of $3tn national infrastructure stock in 10 years rather than 300 years

•Edun: $10bn FX inflows due in few weeks

•Additional tough decisions inevitable, Cardoso declares

•Naira weakens to all-time low of N1,210/$ on parallel market, official FX now N793.34/$

Deji Elumoye, James Emejo in Abuja and Nume Ekeghe in Lagos

President Bola Tinubu yesterday promised to clear the backlog of all futures and forward foreign exchange (FX) contracts which have continued to negatively impact investor confidence in the economy.

The pronouncement by the President came as a huge sign of relief for both domestic and international investors who had often blamed the current macroeconomic challenges largely on the liquidity constraints in the FX market.
Also yesterday, the Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, said the country hopes to attract $10 billion in foreign currency inflows within the next few weeks.

He said the inflows would ease current liquidity challenges and further boost investor confidence in the economy.
This was just as the Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, hinted on further implementation of tough decisions by the government as part of efforts to reposition the economy on the path of growth.

He insisted that ongoing fiscal and monetary policy reforms have had salutary effects on the economy so far. Specifically, he said the removal of fuel subsidy and exchange rate unification have availed the government substantial revenues to meet its obligations.
Cardoso also pointed out that going forward, the CBN would take its objective of price stability “very seriously.”
The trio spoke at the opening of the 29th Nigerian Economic Summit (NES#29),
with the theme: “Pathways to Sustainable Economic Transformation and Inclusion”.
However, on same day, the naira sustained its slide against the US dollar on the parallel market as it weakened further to an all-time low of N1,210/$1 yesterday, compared to the N1170/$ it was at the weekend.

On the other hand, on the official Investors and Exporters (I&E) FX Window, the naira appreciated to N793.34/$, stronger than the N808.27 /$ it closed on Friday. However, intra-day trade from the data obtained by FMDQ showed that the highest spot rate exchanged at N900/$1 while the lowest spot rate recorded was N701/$1. With the gap between the official and the parallel market widening further, the arbitrage between the official and parallel market has now widened to N416 per dollar.

However, Tinubu while speaking at the Summit said, “All foreign exchange future contracts will be honoured by this government.”
He further hinted that among several initiatives, his administration was continuing with the development of wide-ranging reforms to the fiscal and tax policies to ensure an efficient, fair and growth-friendly fiscal environment.

He stressed that despite the pain felt by Nigerians as a result of current reforms, “Soon, we shall begin to reap the rewards.”
He said, “I assure you we have a line of sight to the foreign exchange we need to refloat this economy. And we will get it.”
Tinubu also said his administration was not blind to the challenges Nigerians were facing in the financial markets, adding that the government foresees prospects for additional FX liquidity inflows needed to restore market confidence.

Tinubu said “I can allay these concerns by revealing that we have a good line of sight for the additional foreign exchange liquidity that is required to restore market confidence.”
The president said the prospects for a N1 trillion Nigerian economy by 2026, was feasible as well as a N3 trillion – economy within a decade.
He said he remained confident that by working closely with the private sector, the financing of the $3 trillion National Infrastructure Stock could be achieved in 10 years and not in 300 years.

He said building megacities in every geopolitical zone of the size and scale of Lagos must not take the country another six decades.
Tinubu said, “We can do it in one decade. A fully networked and connected Nigeria by rail, gas, fibre optics and road network can be constructed in less than 20 years.
“Establishing thriving industrial zones in every part of Nigeria is possible before 2030.
“We can do it with double-digit, inclusive, sustainable and competitive growth.
“This is our agenda, and I would like to charge you, the captains of industry here present, to commit and redouble your commitment to our vision of a renewed and more prosperous Nigeria, a better Nigeria for all.

“For us to successfully deliver our promise to Nigerians, we recognise that it is imperative that we foster a highly collaborative relationship with the private sector. We must work together.
“I have proven capacity in this regard, as we remember the role of public-private partnership in the transformation of Lagos State under my leadership. We will replicate that across Nigeria with your unwavering support.”

Tinubu, who declared the two-day summit open urged the participants to craft strategies that have the relentless backing of the collective will.
He said, “You have my commitment that my government will act on the Summit report when it is received from you.
“The future is calling, and this administration will not hesitate to seize this moment. Our finest destiny awaits us all. Let Nigerians breathe a sigh of renewed hope and confidence.”
The president also pointed out that his administration had introduced several measures to resuscitate the economy; including the N500 billion intervention to support small businesses and the agricultural sector.

He said by January 2024, the new student loan programme and consumer credit schemes would become oparational, adding that new and affordable homes would also be built at record pace.
He tasked the summit deliberate and proffer more solutions to compliment the programmes already undertaken by the government to ameliorate the sufferings of Nigerians.
He noted that to mobilise finance for sustainable development, the government has simultaneously commenced an aggressive domestic and external mobilisation of financial resources and capital from a wide range of partners.

He said the federal government remained committed to delivering improved livelihoods and positive economic outcomes which Nigerians can tangibly feel and experience.
Tinubu said, “Our government is committed to delivering improved livelihoods and positive economic outcomes which Nigerians can tangibly feel and experience. Our only objective is to create a fairer and safer playing field for all.
“To make these priorities possible, we are strengthening the machinery and architecture of governance by establishing a public and civil service culture and structure that is performance and result-oriented.
“We shall govern ethically, with accountability and transparency; implementing sound and effective policies to accomplish our eight priorities.”
According to him, “To stimulate economic growth, we announced the end of a crippling fuel subsidy regime and the unification of foreign exchange rates.

“Combined with the effects of an unsustainable fiscal deficit and hidden subsidies, these factors distorted the money supply and created an unfair playing field for an elite crop of unpatriotic forces. But that is no more.
“These changes have been tackled head on. My government has introduced several measures to resuscitate the economy; including the N500 billion intervention to support small businesses and the agricultural sector.”

In his contribution, Edun, however, noted that Tinubu had signed two executive orders to allow domestic issuance of instruments in foreign currency and also allow all cash outside the banking system to be brought into the banks.
He said, “There is a line of sight on $10 billion worth of inflow of foreign exchange in a relatively near future, in weeks rather than months.”
He further said liquidity would also come from the Nigerian National Petroleum Corporation (NNPC) Limited crude sales and foreign investment firms willing to invest in the country.
He said, “These measures taken as a whole and comprehensively should lead to the flow of foreign exchange.”

Speaking at the opening plenary titled, ‘Reset: An Agenda for Economic Transformation’,
Edun said, “The first thing that is happening is economic stabilisation, focusing on revenues from various sources.
“Mr. President is someone that believes in the rule of law, and another area is getting hand on fiscal deficit – we are making sure that the fiscal deficit is reduced and funded in a conventional way.
“As part of the wider form of review, there is the revamping of foreign exchange market.
The foreign exchange market will be simplified, digitalised and will be reformed such that all transactions will fall within the purview of authorities and formal market.
“Anything outside that will be illegal and criminal offence and will be punished and it will be followed up.

“If you want to pay school fees, or health and any other thing, it will be simplified and you will be able to provide identities such as BVN, NIN and you will do your transaction which will be formal.
“The foreign exchange market whether you are giving to a bank, Bureau De Change or an app, all that will be within the formal market.
“There is a line of sight of $10 billion worth of inflow of foreign exchange in the relatively near future.”

Nonetheless, Cardoso, expressed relief that the bleeding of national resources had been put to an end following the removal of subsidy. He added that the country was now on the path of rebuilding.
According to him, “If the fiscal is bleeding, it makes life very difficult for us on the monetary side. But to the extent, that has stopped and it’s a big deal.”
He said, “This is something that we tried to do for successive years and we failed and the result of not doing it, you have all seen it, and now suddenly, it has stopped.

“In addition to that, the attempt at unification of the foreign exchange market not by anything perfect, but at least, substantial more revenues have come in, so the combination of these two things in addition to some of the other efforts that are being done on the fiscal side are commendable and in due course, we will see the outcome.”
He said, “There are more difficult decisions to be made, no question about it, but the two difficult decisions have been taken and now it is the question of managing things to get to where we really want to get to.”

The central bank governor also said the apex bank was working towards ensuring that the FX market was free from arbitrage with rule-based policies and where there are no policy flip- flops, but where there is predictability.
He said the CBN would soon introduce a framework that speaks to rules and enhances transparency in the FX market.

Cardoso added, “We do need to have a situation where the rules apply to all, we are going to come out with an elegant document that will tell you exactly what the rules are.”
On his part, the Minister of Budget and Economic Planning, Senator Abubabar Bagudu, said: “We are going to either put more money in the budget, or generate more investment in the eight priority areas of the government so that we can see with certainty that security will improve, agriculture and food security will be enhanced, inclusivity will be achieved by providing access to capital, thereby generating economic growth.

The federal government plans to broaden the official foreign-exchange market as a step towards outlawing the parallel market, Taiwo Oyedele, who is the Chairman of Presidential Committee on Fiscal Policy & Tax Reform said.
According to him, the central bank plans to allow other participants including bureaux de change and financial-technology companies that provide mobile-money services.
Once the official market has been expanded, the parallel market will be turned into “a black market, which is just for illicits and speculators,” Oyedele said.