Former Nigerian Minister of Information Jerry Gana blamed banks and other economic “gatekeepers” for creating an unfavourable environment that discourages both foreign and domestic investment. Major impediments to business in Nigeria, according to him, include high currency rates and financial institutions’ manipulation of foreign exchange. Gana claims that potential Investors are frustrated because banks have put their personal profits ahead of the country’s economic expansion. With a population of over 200 million, Nigeria offers a sizable market for investors, but the actions of financial institutions are stifling Investment opportunities, Gana said at a press conference for the African Biblical Leadership Initiative (ABLI) conference, which is set for October 21 in Abuja.
In order to make sure banks act in the best interests of the country, he urged that bank licenses should be revoked. Furthermore, Gana stressed the importance of value-based leadership in Africa and connected ineffective leadership to the country’s economic problems. He stated the goal of the conference, which is to build transformative leaders in Nigeria and throughout Africa, in his capacity as chairman of the ABLI conference. Deterring foreign investments and negatively impacting the Economy of Nigeria are high exchange rates and forex restrictions.
Foreign investors withdrew due to foreign exchange rate.
Nigeria’s exchange rate to the US Dollar hit all-time highs in 2023, ranging on the Black Market from ₦700 to ₦800 per dollar, while the official rate stayed between ₦460 and ₦470. Due to the significant disparity in exchange rates between the official and black market rates, businesses found it challenging to obtain foreign exchange for the purpose of importing products and services. As a result, a significant number of foreign investors withdrew, as seen by a 20% decline in FDI to Nigeria in 2022, as reported by the National Bureau of Statistics (NBS).
Aside from driving up import costs and inflation, which reached over 24% in 2023, high exchange rates also increased the cost of doing business. It was less appealing to investors because of this climate, particularly for those seeking stable financial circumstances. Concerns expressed by Jerry Gana have been repeated by financial professionals, some of whom have called for changes. Prominent economist Bismarck Rewane observed that potential investors were deterred from investing due to the bank’s control over the foreign exchange market and its fluctuating exchange rates.
Sound leadership must prioritise economic policies that promote prosperity.
Investor confidence would increase, he claimed, if the exchange rate system were united. Forex pressure might be reduced and long-term investment may be drawn in, according to Laoye Jaiyeola, CEO of the Nigerian Economic Summit Group (NESG), who also proposed that currency market reforms should be combined with consistent and transparent regulations. In addition to taking away banking licenses, Gana suggested resolving inconsistent policies and encouraging a steady exchange rate in order to draw in investors. Assuring that financial institutions serve the public interest rather than just personal profit, he underlined that sound leadership must place a high priority on economic policies that promote prosperity.
To establish an atmosphere that is favourable to investment, value-based leadership in this sense refers to a change towards moral decision-making, accountability, and transparency. Replacing speculative forex trading with more productive sectors such as industry and Agriculture would be one way to implement practical reforms like better regulatory monitoring of banks. Along with lowering red tape, facilitating economic transactions, and improving infrastructure, leaders should focus on these other issues. Due to its historical over-reliance on oil exports, Nigeria has been particularly vulnerable to changes in the price of oil globally.
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Structural problems like inadequate infrastructure, corruption, and erratic economic policies have made the business climate worse over time. Shortages of foreign exchange have been a major problem in recent years, especially during the COVID-19 epidemic, which caused a sharp decline in crude oil prices and a subsequent reduction in Government Revenue and influx of dollars. Due to the restricted access to foreign exchange, the Naira depreciated and Inflationary Pressures increased, negatively impacting both consumers and companies.