The President, Association of Bureau De Change Operators of Nigeria, Alhaji Aminu Gwadabe, has said that rising inflation, among other challenges, are compounding naira volatility.
In a statement, Gwadabe said the unfolding scenarios raised the risk of stagflation with potentially harmful consequences for the poor within the economy.
“Naira volatility, despite foreign exchange interventions by the Central Bank of Nigeria, is being compounded by rising inflation, interest rate hike and slow economic growth with consequences for middle- and low-income earners,” he said.
He said already, global growth was expected to slump from 5.7 per cent in 2021 to 2.9 per cent in 2022, significantly lower than 4.1 per cent predicted by the International Monetary Fund in January.
To keep the Nigerian economy going strong in the face of these challenges, Gwadabe called for improved local production and diversification of the economy from oil.
He said the naira exchanged at N614/$1 at the parallel market, and dollar bids continued to rise as inflation rose to 11th-month high (17.71 per cent) in May.
These occurrences, the ABCON boss said, were eroding the purchasing power of households.
He said, “The biggest driver of inflation is the stubborn rise in food inflation. The average price level of the food basket rose by 1.13 per cent to 19.50 per cent in May from 18.37 per cent in April.
“This can be reversed by increased support for agriculture and government policies that support the sector.”
Gwadabe further said Nigeria’s huge population and diasporan market, which attracted average of $20bn annually, could be explored to deepen dollar inflows to the economy.
He said expanding the dollar receipt through over 5,000 Bureaux de Change operators could deepen dollar inflows and significantly raise Nigeria’s forex position.
Gwadabe said globally, BDCs remained one of the channels through which the diaspora remittance funds came into countries.
He said that the BDCs remained at the centre of economic development and had the capacity to attract needed capital for the development of the Nigerian economy and deepening of forex market.
According to ABCON, the success of BDCs would be boosted by access to multiple streams of forex earnings to deepen the market, keep the naira stable and strengthen BDCs operations.
