Nigeria needs to close the gap between the official and black market rates for the Naira against the dollar “very soon”, Vice President Yemi Osinbajo said on Tuesday, as Africa’s largest economy grapples with inflation and the risks of devaluation.
“The gap between the official and parallel market it isn’t helpful,” he told reporters at the World Economic Forum in Davos. “If you look at the economic recovery and growth plan it is the expectation that this is a conversation we are having with central bank.”
The naira’s official rate, controlled by the government, has hovered just above 300 to the dollar since it was devalued in June. But that is still 40 percent stronger than rates on the parallel market, a gap that is discouraging investment from overseas and leaving Nigeria starved of foreign currency.
The official and black market naira foreign exchange rates will be “unified” this year, but there is no time frame for when it could happen, said Osinbajo.
Financial institutions, among others, have argued that Nigeria must allow its currency to float freely to solve its foreign exchange woes, a measure which has met opposition from President Muhammadu Buhari.
Nigeria’s lack of dollars has been exacerbated by a crunch in oil production, caused by militant attacks on facilities in the crude-rich regions in the southeast Delta region, and low global prices for oil, on which the government depends for 70 percent of its revenues.
“The current output is 1.7 to 1.8 million barrels per day and it could improve very quickly as soon as we sort out things in the Delta,” Osinbajo said.
In an effort to end militant attacks and remain “actively engaged”, Osinbajo travelled to the Delta region for talks with militants earlier this week. Additionally, Nigeria aims to sell Eurobonds worth $1 billion in March, said Osinbajo, rather than February as originally hoped, which could help refill government’s coffers.
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