Unify Bureau de Change rate with official exchange rate, NISER don tells FG`

An academic of the Economics and Business Policy Department, NISER, Ibadan, Dr Damilola Arawomo has advised the federal government to unify the bureau de change rate with the official exchange rate to reduce import dependency and engender sustained economic growth and development.

Arawomo made this call while presenting a paper titled, “Multiple Exchange Rate and Macroeconomic Variable in Nigeria” at the October edition of the monthly lecture series of the Nigerian Institute of Social and Economic Research (NISER) Ibadan.

Noting that the bureau de change rate had a negative impact on the general price level, domestic investment, Arawomo argued that a unified exchange rate will have a positive impact on exports and imports.

To bring about the needed result, he emphasized the need for the official exchange rate to be made easily accessible, especially to the productive sector of the economy, by reducing import dependency.

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Though he noted that the lack of diversified export base was the bane of the Nigerian economy, Arawomo stressed that an increase in export and investment, as a result of a unified exchange rate, would strengthen the productive base of the economy.

While noting that the multiple exchange rate had helped the nation cope with price shock and declining external reserve, he noted that adopting the unified exchange rate will help in reducing inflation and promoting trade completeness.

“Government should unify the bureau de change rate with the official rate since it is more difficult to counter the negative effect of the former on the general price level.

“In the short term, the official exchange rate should be made easily accessible, especially to the productive sector of the economy; the long-run strategy should be towards unification with the intent of reducing import dependency for sustained economic growth and development,” Arawomo said.

Speaking further, he called Nigerians to bear with the harshness of current government policies, especially the recent closure of borders.

He noted that the policies will help the exchange rate appreciate and facilitate economic progress, in the long run.

Chairman of the occasion, Professor Sheriffdeen Tella, who spoke in the same vein as Arawomo, said prices of commodities which were currently high as a result of border closure, will come down once domestic output increases.

“As a result of the border closure, things will initially be difficult but over time those prices that are high will come down when we start producing and consuming our own.

“When we open borders, it is not that we are buying from our African borders, we are still buying products from countries outside Africa and that is not good enough. So, we have to bear the price for now and the prices will come down when our domestic output starts increasing,” Tella said.

In his remarks, Director General, NISER, Dr Folarin Gbadebo-Smith, stressed that formulators of government politics should shun politicizing issues, but deal with them in the interest of the economic growth and development of the nation in the forthcoming years.