Nigeria: African Development Bank (AfDB) Supports Nigeria’s FX Rates Unification

The African Development Bank (AfDB) has commended President Bola Tinubu’s administration in Nigeria for unifying the naira exchange rate, stating that it will bring transparency to foreign exchange (Forex) markets. Dr Akinwumi Adesina, the president of AfDB, made this statement during the Nigeria Employers’ Summit in Abuja. He emphasized that the exchange rate unification would enhance transparency in allocation and access to foreign exchange, eliminating distortions and boosting export competitiveness. Adesina also highlighted the importance of a vibrant and competitive private sector in accelerating the diversification of Nigeria’s economy and promoting exports.

While acknowledging the potential of Nigeria’s private sector, Adesina noted that policy inconsistencies and implicit taxation have hindered its development. Many private sector firms in Nigeria face challenges such as providing their own utilities and repairing infrastructure. Consequently, foreign direct investment (FDI) inflows have declined significantly in recent years. Adesina stressed the need for closer collaboration and dialogue between the government and the private sector to develop strategies that position Nigeria as an attractive investment destination.

Adesina further suggested that Nigeria could learn from countries successful in attracting FDI into their manufacturing sectors. He emphasized the importance of promoting trade and regional integration, particularly with the African Continental Free Trade Area coming into force. Adesina pointed out the significant infrastructure deficits in Nigeria and cited the World Bank’s report on the country’s infrastructure needs. To address these challenges, he proposed mobilizing the private sector for infrastructure development and service delivery, reducing the burden on the government.

In terms of energy sector investments, Adesina highlighted the urgent need for reliable and affordable energy services to enhance Nigeria’s industrial competitiveness and integration into global supply chains. He recommended addressing the power sector issues by investing in renewable energy generation, particularly solar, while leveraging initiatives like the Desert-to-Power initiative aimed at providing electricity to millions of people in the Sahel region.

Adesina emphasized the importance of regional infrastructure development and trade policies to tap into regional and international markets. He encouraged Nigeria to utilize trade agreements effectively and prioritize the promotion of value-added exports in its trade policies.

Overall, the AfDB expressed its support for Nigeria’s efforts in unifying the exchange rate and highlighted the importance of a thriving private sector, infrastructure development, and trade policies in driving economic diversification and growth.