The Chartered Institute of Bankers of Nigeria (CIBN) has lauded President Bola Tinubu’s proactive move to unify the naira exchange rate, a pivotal step to prevent a looming financial crisis and ensure economic stability. Ken Opara, the President/Chairman of the Council of CIBN, expressed this commendation during the 2023 Lagos Bankers Night event, held under the theme “Exchange Rate Unification: Glocal Implications, Organization’s and the Country,” on Friday night in Lagos.
Opara reiterated that the institute has consistently advocated for transparency and a free market framework that allows the dynamic interaction of supply and demand forces. He stressed, “The Chartered Institute of Bankers of Nigeria fully supports the Central Bank of Nigeria’s reforms, particularly the unification of the exchange rate and other measures aimed at ascertaining the true value of the Naira.”
Highlighting the collaborative effort among industry experts and stakeholders to champion this reform, Opara pointed out that Dr. ‘Biodun Adedipe, along with other scholars, and Mr. Laoye Jaiyeola of the Nigeria Economic Summit Group, gathered at the Bankers House to applaud the unification of the exchange rate. He emphasized the observable benefits of the reform, citing the decreasing exchange rate between the naira and the dollar, indicating its prudent design.
Opara affirmed the institute’s ongoing commitment to contribute and propose strategies to bolster the growth of the country’s economy. He emphasized, “Our role as an industry concept is to support Nigeria’s advancement, and we will continue to do so because we believe in the solid, stable, and efficient nature of the banking industry.”
Additionally, Opara highlighted the robust payment system in Nigeria, describing it as the best worldwide, facilitating real-time online transactions. This serves as evidence that the banking industry and its regulatory body have effectively established a stable payment ecosystem.
He dispelled media reports suggesting that the Lagos branch of CIBN was against the exchange rate unification, clarifying that such reports were baseless and aimed at causing unnecessary panic.
‘Biodun Adedipe, Chief Consultant of B. Adedipe Associates Ltd. (BAA Consult), shared his perspective on the exchange rate unification, underscoring that Nigeria had traversed similar paths with varying terminologies like devaluation, correction, alignment, and depreciation. Adedipe explained that the primary goal of this unification was to eliminate the premium between the official rate and the parallel market rate.
Citing historical instances, Adedipe affirmed that exchange rate movements significantly influenced all other prices more than adjustments in interest rates. He added that Nigeria had achieved stable rate convergence only when significant external reserves were in place.
The expert noted that the parallel market rates typically diverged from the official exchange rate within two to six weeks after each premium removal episode. He emphasized that speculative attacks on the currency arose when a stable and enduring supply was not visible.
Recalling President Tinubu’s inauguration statement in May, where he pledged to unify the varying exchange rate systems across the country, Adedipe highlighted that the President’s decision was driven by the aim to safeguard Nigeria from a potential financial crisis. Drawing parallels between this approach and Tinubu’s approach to fuel subsidy removal, Adedipe affirmed that this strategy was chosen in the best interest of the country’s economic stability and growth.