Investment Banker and Business Developer, Lai Omotola has blamed the continued decline in the value of the Naira against the Dollar on Nigeria's decision to allow for the operations of town markets, official and parallel, saying every developed nation has a single market.
Noting that what is known as the “parallel market” is illegal and operated by dubious people masquerading as businessmen, the economist said it was unfortunate that such persons speculate on their own country's currency.
Speaking on breakfast show on Arise TV monitored in Abuja on Thursday, Omotola said; “What has happened in this regime is that they have considerably removed the CBN and you now have only the Naira facing the official market and what they call the parallel market.
This is not going to work because when you say that you want to have market forces determining the value of the Naira, then there must be a single market. There is nowhere in the world where you have two markets and it works.
“Now, what is propelling this rise in foreign exchange is because we have a parallel market which is a black market, an illegal market where when people cannot get enough from the official market, they go to the black market.
Now as long as that black market creates that difference of N300, created by these same speculators or market cabals, people would go for the one with additional N300. But by doing that, you are also contributing to the decline of the Naira”.
Omotola regretted that a lot of money is currently in the hands for idle people. He said the amount of dollars in the hands of such unproductive persons are enough to solve the foreign exchange problems facing the country.
“The truth of the matter is that CBN is not supplying dollars into the market. Some people have these dollars with them and what they do is that on a daily basis, if the economy needs $100m, they would put $50m in the official market system and when you have much demands chasing short supply, you would now be forced to go to the black market. No developed nation runs a black market.
“Today, we have people with dollars in their hands for unproductive means – speculators. The real value of the Naira should be people who are interested in foreign exchange for productive means and not for speculative means.
The value of Naira would average, based on everyone trying to get the dollar. If you do a census, you would see that close to 60 percent of people chasing the dollar is fro speculative reasons which doesn't happen in any developed economy.
We are a developing economy and we must not allow our economy to be gateless where you have people saying they are businessmen and all they do is to speculate on their own country's currency.
When you remove that speculation, the actual value of the Naira will show itself and it cannot be that N1,200 or thereabouts.
“The major problem we have is that tons of money are in the hands of unproductive people who you call portfolio investors.
All the dollars we need to solve all our problems are lying down somewhere, sealed and hidden. And as long as we continue to have that, we are not going to make progress as a nation because these people having this money are unproductive with it.
They are just getting the money to stock it, not to make it as a cash flow. It is beyond government regulations, it is the mindset of our major business owners; how they think, their behavioural pattern.
Every subvention that government brings up, every regulation that government brings up, the big business owners are always thinking of how to pervert it, how to shortchange it and that is what has brought us to this”, he stated.