Embrace Local Production to Tackle Currency Volatility: Financial Expert
From Olanrewaju Lawal, Birnin Kebbi
Professor Ahmadu Umar Sanda, a professor of Financial Economics at Usmanu Danfodiyo University, Sokoto (UDUS), has urged Nigerians to embrace local production to combat exchange rate volatility and promote sustainable economic growth.
Speaking at a seminar titled “Exchange Rate Volatility in Nigeria: Lessons and Policy Implications” at the Federal University Birnin Kebbi (FUBK), Professor Sanda highlighted the detrimental impact of currency fluctuations on the Nigerian economy. He emphasised the need for a collective effort to address this issue, including embracing local production and supporting domestic industries.
The seminar, chaired by Professor Aminu Salihu Mikailu, former Vice Chancellor of UDUS, Kaduna and Nasarawa States Universities, attracted participants from academia, government agencies, and the private sector.
Professor Sanda identified several factors contributing to exchange rate volatility, including interest rates, money supply, inflation, foreign reserves, and crude oil prices. He explained that rising interest rates, coupled with an increase in money supply, can exacerbate inflation and currency depreciation.
He also noted that the recent announcement by President Tinubu regarding the removal of fuel subsidies led to an increase in petrol prices, further weakening the naira.
Professor Sanda emphasised the importance of strong foreign reserves and rising crude oil prices in strengthening the currency. However, he stressed the need for a flexible foreign exchange management system to capitalise on these factors.
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He urged Nigerians to reduce their reliance on imported goods and embrace local production. This, he argued, is crucial for achieving sustainable economic growth and reducing the countrys vulnerability to external shocks.
Professor Sanda also called on fiscal authorities to implement policies that support monetary stability and promote economic growth. He cautioned against excessive money supply growth, as it can lead to inflation and currency volatility.
Furthermore, he recommended the adoption of a new methodology for measuring the nairas exchange rate.
In his remarks, Professor Muhammad Zaiyan Umar, Vice Chancellor of FUBK, acknowledged the negative impact of exchange rate volatility on the Nigerian economy. He attributed this issue partly to the hoarding and exchange of goods and services using foreign currencies.
Professor Umar urged the government and regulatory agencies to intensify efforts to promote economic growth and development. He commended the Central Bank of Nigeria (CBN) for its efforts to stabilise the naira but stressed the need for continued action.
He expressed gratitude to the presenter and participants and emphasised the importance of continuing the seminar series at the institution.