Nigeria’s Emefiele Stands Firm on Foreign Exchange Controls

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Central Bank of Nigeria Governor Godwin Emefiele reiterated on Wednesday that foreign exchange controls were helping to stabilize the naira and replenish reserves, amid criticism the measures are harming the economy.

“These policies have led to a significant stabilization in the exchange rate and an improvement in market sentiments,” Emefiele said in a speech to Nigeria’s Senate in the capital, Abuja. The measures, coupled with efforts by the five-week old administration of President Muhammadu Buhari to cut wasted spending “have seen our foreign exchange reserves begin a gradual recovery,” he said.

The central bank started restricting currency trading in December in a bid to stem the fall of the naira as the price of oil, Nigeria’s main export and source of two-thirds of government revenue, plunged. Last month, the central bank banned importers of about 40 items including toothpicks, private jets and wheelbarrows from using official foreign-exchange markets.

Emefiele said Nigeria’s foreign-exchange reserves have risen to $31.9 billion on Tuesday, more than the figure of $29.6 billion from the central bank’s data for the same day. Ibrahim Mu’azu, a spokesman for the regulator in Abuja, didn’t immediately respond to an e-mail asking for an explanation of the discrepancy. Reserves fell 23 percent to $29 billion in the year to the end of June.

‘Zero Tolerance’

The central bank has “zero tolerance for speculators,” Emefiele said in the speech. “Nigeria’s foreign reserves remain our common wealth and we must all strive to work together to protect it and prevent speculators and rent seekers from plundering it.”

While the measures have stabilized the naira at an average of 199.02 per dollar since the start of March, they have left it overvalued and caused investors including BlackRock Inc. and Aberdeen Asset Management Plc to shun local bonds and stocks until there’s a devaluation. Naira forwards indicate the currency will depreciate to 248.13 per dollar in a year, while the black market rate fell to 230 last week.

Nigeria needs to let the naira devalue as the restrictions are starting to harm growth in Africa’s largest economy, Bisi Onasanya, the chief executive officer of the country’s biggest lender by assets, First Bank of Nigeria, said in an interview with Bloomberg last month.

Emefiele said the curbs on importers were necessary to boost Nigerian manufacturing.

“At the heart of the issues that currently confront our nation is the need for us to diversify the structure of our economy from being import dependent to being an economy that produces what she consumes,” he said.

(An earlier version of this story corrected the spelling of the central bank governor’s name in the headline.)

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