Sets of data released on Monday by World Economics shows Nigeria’s Business Confidence Index dipped for the seventh month in a row. This index represents the lowest level in a year. The data pointed out that poor consumer demand, rising unemployment, high inflation, lower oil prices and difficult exchange rate conditions are factors that have contributed to the poor outlook of the Nigerian economy.
Employment levels plummeted as companies assumed a staff rationing strategy as part of cost-cutting measures at lower level of employment. In reaction to this, the United States said it would urge Nigeria to embrace a more malleable FOREX in order to boost growth and investment.
In a statement issued by the United States Assistant Secretary of State for Africa, Linda Thomas-Greenfield, she said “While most people complain about the possibility of there being a devaluation, people are already operating on a devalued currency, and the only people who are not, are people who are doing it officially. Our recommendation is, and we will have discussions about it … that they should look at the exchange rate and try to make the exchange rate more realistic to what the value of the naira is to the dollar.
“Capital controls that limit access to foreign exchange rewards insiders and undermines the stated goals of Nigeria to increase domestic production because both Nigerian and expat investors alike tell us many businesses are unable to obtain the capital to purchase badly needed intermediate goods.”
The Nigerian naira exchanges at 40 percent below official rate on the black market. Last year, the Central of Nigeria fixed exchange rates so as to restrain speculative demand for the dollar and conserve FOREX reserves. Following the visit of IMF chief, Christine Laggard, the body called on Nigeria to relax laws on FOREX so that the markets will mirror the effects of demand and supply. President Buhari has so far refused to devaluate the naira.