A Nigerian presidential candidate, Peter Obi, said the exchange rate of the local currency against the dollar should not be fixed but should be determined “by the forces of demand and supply”. Highlighting the success of Nigerian fintech Flutterwave, the candidate said if elected, his government would create an enabling environment for other startups to similarly thrive and succeed.

Two-tier exchange rate regime under attack

A candidate for Nigeria’s upcoming presidential elections, Peter Obi, has said that the official local currency exchange rate – currently ankle at just under N450 for every dollar – to be determined by market forces. Obi, who is one of three main candidates seeking to replace incumbent President Muhammadu Buhari, also attacked the current two-tier exchange rate regime.

The Labor Party candidate’s remarks come just over a month after the naira plunged to its worst-ever exchange rate against the US dollar. As Bitcoin.com News reported in late July, the naira had hit an all-time low of N710 per dollar. In response to the then rapid depreciation of the naira, the Central Bank of Nigeria (CBN), which last devalued the naira in May 2021, blamed speculators.

In the immediate aftermath of the CBN allegations, Nigeria’s anti-corruption body, the Economic and Financial Crimes Commission (EFCC), swooped down on currency traders and bureau de change operators in and around the Wuse area. 4 from Abuja. The EFCC’s raid on currency speculators initially seemed to trigger the rally in the naira. However, more than a month later, the naira exchange rate had returned to over 700 naira to the dollar.

“A restrictive monetary policy” envisaged

In a Twitter thread which outlined his plans for the country should he win the presidency, Obi suggested a solution which he believed could put an end to the naira’s woes. He explained:

The truth is that for a long time market forces did not determine the Naira exchange rate. The two-tier exchange rate regime is a fluke. It has to end. Let the exchange rate be determined by the forces of supply and demand. It’s as simple as that.

As well as abandoning the pegged exchange rate system, the Labor Party candidate said when elected that his government will not fight inflation by controlling prices and wages. Instead, he will “pursue a tight monetary policy.”

Meanwhile, in the same thread, Obi also touted Nigerian fintech startup Flutterwave, which has since grown into a billion-dollar company. To ensure more startups succeed in the same way, Obi said his government will “create an enabling environment for our startups to thrive.” This will be done by applying a legal framework that protects both “foreign investors and their indigenous partners”.

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Terence Zimwara

Terence Zimwara is an award-winning journalist, author and writer in Zimbabwe. He has written extensively on the economic issues of some African countries as well as how digital currencies can provide an escape route for Africans.

Image credits: Shutterstock, Pixabay, Wiki Commons

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