Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele has advised the federal government to digitize the foreign exchange market to capture all transactions done in the market and also converge the official and parallel markets.
This, according to him, was one way to capture diaspora remittances that were not getting to the country’s foreign exchange market.
He said this was important as only 10 per cent of the $20 billion 2023 diaspora remittances reached the Nigerian foreign exchange market.
Speaking during a panel discussion at the 2024 Economic Outlook and Budget Analysis organised by the Lagos Chamber of Commerce and Industry, LCCI, Oyedele noted that while the World Bank had estimated that a total of $20 billion was brought to Nigeria in 2023, most of the funds were externalised through digital transfers from other countries.
He averred that the Nigerian foreign exchange market’s incapacity to absorb these remittances has added to the liquidity shortfall in the market.
“The World Bank said for 2023 our diaspora remittances was about $20 billion. We estimate that more than 90% of that did not get to Nigeria. They were being externalized.
“We’ve spoken to loads of Nigerians almost everywhere and they told us how they send money now. They use digital apps. We have the list of those apps. They use parallel market rates. So, they credit Naira here in Nigeria without bringing the Dollars.”
Oyedele added that the federal government needs to expand the official foreign exchange market to include BDC and Fintech, adding the CBN can then regulate them to ensure transparency and accountability.
“Almost all our FX sources are electronic. On our own, we will convert it into physical cash by importing dollars into Nigeria. So, one of our recommendations is that the government should digitize the FX market and the CBN can set a threshold.
“We need also to have convergence in the official market and the parallel market. One of our recommendations to be able to do that is to expand the official market. Why is it that it is only the CBN and the banks that are in the official market? Why don’t you bring in BDC? Why don’t you bring in these apps? And then regulate and have clear rules for price determination.”
