The Naira has already been devalued to N300 to a dollar, the CBN is just subsidizing that exchange rate to selected sectors in the economy. So as at January 2016, Nigeria operates a dual exchange rate policy, the free market is N300, the government market is N199.
Apart from the obvious issues of round tripping, the other issue is this, the government is intervening in the private sector to select who get a subsidy. According to the CBN, if your business brings clear benefits to Nigeria, you get the dollar subsidy. This may sound like a great idea but it’s simply the federal Government choosing winners and losers in a private market place.
If the business is so viable commercially, let it source its own forex. If the argument is that a certain sector is crucial to the economy of Nigeria, then put out clear conditions or benchmarks for business to qualify. Say if you meet condition A, B and C, you get subsidized dollars, just the same way intervention funds are disbursed…. it’s should not be on a case by case basis, subject to individual proclivities.
To me, the CBN subsidy should only apply to non-commercial, government transactions eg, the FGN want to import arms or pay international fees etc, then it may subsidize the forex, but to sit in a committee in CBN and decide what individual business will get forex and which will not is simply prejudicial to the business that do not get the subsidy.
Neither the CBN nor the FGN should be in the business of selecting winners
Apart from the obvious issues of round tripping, the other issue is this, the government is intervening in the private sector to select who get a subsidy. According to the CBN, if your business brings clear benefits to Nigeria, you get the dollar subsidy. This may sound like a great idea but it’s simply the federal Government choosing winners and losers in a private market place.
If the business is so viable commercially, let it source its own forex. If the argument is that a certain sector is crucial to the economy of Nigeria, then put out clear conditions or benchmarks for business to qualify. Say if you meet condition A, B and C, you get subsidized dollars, just the same way intervention funds are disbursed…. it’s should not be on a case by case basis, subject to individual proclivities.
To me, the CBN subsidy should only apply to non-commercial, government transactions eg, the FGN want to import arms or pay international fees etc, then it may subsidize the forex, but to sit in a committee in CBN and decide what individual business will get forex and which will not is simply prejudicial to the business that do not get the subsidy.
Neither the CBN nor the FGN should be in the business of selecting winners
No comments:
Post a Comment