Forex reforms critical to unlocking Nigerias growth Razia Khan

Nigeria’s quest for rapid economic growth and increased foreign exchange inflows is tied to the implementation of foreign exchange reforms to restore investors’ confidence in the economy.

Khan noted that while there has  been an element of foreign direct investor interest in Nigeria already, concerns around  the forex  regime have   discouraged a longer term commitment from foreign investors. 

“With respect to foreign portfolio inflows, nobody’s going to be investing at a time when there’s so much global market volatility and certainly not into a market that isn’t properly functional, or one in which  investors know that they can put money in and get money out as well”, she said. 

While allaying fears that forex reforms will lead to further increase in inflation,  Khan said: “Inflation in Nigeria  is currently being pressured because the parallel forex market determines pricing for many items consumed in Nigeria, so the sooner we see foreign exchange reforms prioritised, make the FX market functional, allow the Investors and Exporters ( I&E)  window to have more price discovery”. 

“We don’t believe looking at what we’ve seen in the past that this in itself is going to be that inflationary because anything that takes activity away from the parallel market and brings it back to official channels could actually lead to the smooth functioning of that market and reining in of potentially runaway inflationary pressures”.