The United States has revealed that it will press Nigeria in talks this week to adopt a more flexible foreign exchange rate to boost growth and investment in the country.
This was revealed by U.S. Assistant Secretary of State for Africa, Linda Thomas-Greenfield, who told an audience at the U.S. Institute of Peace, on Monday, that Nigeria should ensure the value of the naira currency versus the U.S. dollar was realistic.
“While most people complain about the possibility of there being a devaluation, people are already operating on a devalued currency, and the only people who are not, are people who are doing it officially,” she said.
“Our recommendation is, and we will have discussions about it, that they should look at the exchange rate and try to make the exchange rate more realistic to what the value of the naira is to the dollar.
“Capital controls that limit access to foreign exchange rewards insiders and undermines the stated goals of Nigeria to increase domestic production because both Nigerian and expat investors alike tell us many businesses are unable to obtain the capital to purchase badly needed intermediate goods.”
According to a Reuters report, Thomas-Greenfield was setting the tone ahead of talks in Washington, on Thursday, involving officials from the State Department, Pentagon and Treasury and their counterparts in the Nigerian government.
She revealed that the parallel currency market in Nigeria was ‘alive and well,’ but warned that a rigid exchange rate, capital controls and import bans could undermine President Muhammadu Buhari’s efforts to expand economic growth and fight corruption.
Nigeria faces its worst economic crisis in decades as the falling price of oil has slashed revenues, with the naira trading some 40 percent below the official rate on the black market versus the dollar.
Thus, the central bank pegged the exchange rate to curb speculative demand for the dollar and protect foreign exchange reserves, which have fallen to an 11-year low.