Dump exchange rates unification, Lemo tells CBN

The Central Bank of Nigeria should abandon the merger of the parallel and official exchange rates, a former Deputy Governor of CBN, Dr Tunde Lemo, has said.

According to him, the naira is not an internationally convertible currency and a gap of not more than N50 should not worry the apex bank.

Lemo disclosed this in a paper he delivered at the Lagos Business School, recently.

Commending the government for the courage to merge the rates, he stated that the gap had presented huge arbitrage opportunities.

He said, “Unfortunately, dollar scarcity, oil theft, reserve level, previous actions of the CBN (too many rules), outstanding trade’s commodities, capital control, overdue swaps, etc., have dried up liquidity. I advise that policymakers should jettison merging the two rates (naira is not an internationally convertible currency). A gap of not more than N50 should not worry about the CBN.”

He further stated that there might be some issues with some of the government’s monetary policies.

Lemo stated, “Low interest rate: This is very good to wish, but difficult to deliver in a high and rising inflation environment. Interest rates are high due to monetary and structural reasons and low interest cannot be delivered until we rein in inflation and address structural factors.”

The former CBN deputy governor also called for a reduction in the cost of governance in the country.

According to Lemo, the Federal Government is setting a bad example by having the largest federal cabinet in 24 years.

He noted, “The Federal Government has set a bad example by having the largest federal cabinet in 24 years.”

He described the government’s intention to reduce the delegation’s size to the United Nations General Assembly as a good sign, noting that much more was required from the top.

He further painted a dismal picture of Nigeria’s economy, calling for urgent reforms to slow and reverse the worrying deterioration of the situation before it gets out of hand.