The floating of the local currency by the Federal Government is going to stop Nigeria’s foreign exchange rate from going haywire like it did some months ago, the Manufacturers Association of Nigeria has said.
MAN also stated that the move by the Federal Government to break what it described as a monopoly in the power sector would be advantageous to manufacturers and the economy in general.
President Bola Tinubu recently assented to the electricity bill, which authorises states, companies and individuals to generate, transmit and distribute electricity.
This was not completely so before the presidential assent, as only power generation companies licensed by the Nigerian Electricity Regulatory Commission, an agency of the Federal Government, were authorised to generate power to the national grid.
The Transmission Company of Nigeria, also an agency of the Federal Government, evacuates the power to distribution companies, who then distribute to end users.
Commenting on the development on Thursday, the President, Manufacturers Association of Nigeria, Francis Meshioye, told our correspondent that the breaking up of power supply by the new electricity Act would impact positively on the operations of manufacturers.
“It is celebrated that states should generate their own electricity, but this will be beneficial if it is well coordinated, for instance, Lagos have to an extent have a bit of self-generated power in some areas.
“So if they break this monopoly in the power sector currently, it will be advantageous. But the government should give the necessary support and have it well coordinated, because it will be advantageous,” he stated.
Reacting to the floating of the naira, Meshioye said manufacturers welcomed the initiative, as it would stop the country’s exchange rate from going haywire again.
“It is something that we think should make the exchange rate stay at a range and not go haywire like it did the other time when the dollar just rose from N500/$ to N600/$ and then to over N700/$ within weeks.
“It is not likely to be so, going by the floating of the local currency against the dollar. It is one of the things that many people have been looking forward to. So if things are allowed to work properly, it could be one of the fine things to say that the government has done in the recent past.
“It is still far better than when it was left at two different exchange rates, which were neither reliable. One was sold at about N400/$ and the other at about N700/$, and you never can tell which one to use. So floating for now is fine,” the MAN president stated.
The Central Bank of Nigeria unified the country’s exchange rates into the Investors and Exporters window on June 14, 2023, allowing market forces to determine the exchange rate.
Similarly, a former Minister of Finance and National Planning, Dr. Kalu Idika Kalu, told journalists in Abuja that there was nothing to worry about the floating of the naira.
“Fears about the floating of the naira leading to total degradation of the naira are not there. It is inefficiency in production, allocation, saving, investment, and allowing the two sides of exchange to function that is the problem, not the act of floating it,” Kalu stated during a “Meet and Talk,” event organised by Brain Trust Nigeria in Abuja.
The ex-finance minister said it was wrong for the CBN to have continued to determine the value of the naira for a long time, a development that led to the creation of various exchange rates that favoured currency dealers in the parallel market.