The Chief Executive Officer (CEO), Financial Derivatives Company (FDC), Bismarck Rewane, said the naira is currently under-valued at both the Nigerian Autonomous Foreign Exchange Market (NAFEM) and the parallel forex markets.

Rewane stated this on Tuesday in a keynote address at the 2024 Economic Outlook and Budget Analysis organised by the Lagos Chamber of Commerce and Industry (LCCI) with the theme, “Building Economic Resilience in 2024: Strategies for a Sustainable Future.”

His words, “The naira is undervalued by 33.58 percent at the parallel market rate of N1,285 per dollar and 4.16 percent at the NAFEM rate of N890.54 percent.”

Specifically, he noted that the purchasing power parity (PPP) value of the Naira in January was N853.46 per dollar, while the parallel market price was N1,285, indicating an undervaluation of 33.58 percent, and the NAFEM price was N890.54 per dollar, showing a 4.16 percent undervaluation.

He predicted that Nigeria is primed for 3.3 percent growth in 2024 and projected an increase in the minimum wage for workers from N30,000 to N50,000 per month.

Rewane asserted that the main macroeconomic challenges facing the country include suboptimal and non-inclusive growth, increasing income inequality, high poverty, and a high unemployment rate.

Others, he noted, were spiraling inflation, widening fiscal imbalances, and currency pressures.

On the way forward, he said that the government needs to focus on policy changes that will steer Nigeria towards economic resilience in 2024.

According to him, the imperative policy changes include debt rescheduling, increasing interest rates, a more efficient money supply, and an efficient foreign exchange market.

Others are cost-reflective electricity tariffs, reductions in petrol subsidy, and wage reviews.

He said the economy could only get better if there is increased spending on infrastructure development, adding that deficit spending has yet to yield the intended impact on the economy.

Rewane stated: “Key fiscal policy objectives would be to stimulate growth output, boost employment level, ensure equitable distribution of income and wealth, boost investment levels, and debt management.

“Major opportunities for policy changes include exchange rate sanitisation, which would lead to reduction in export smuggling, boost in global commodity supply, lower food prices.

“Opportunities for policy changes in increased tax rate and efficient tax collection would lead to boost in state government revenue, paid contractors and increased demand for cement and other commodities.

“Nigeria will also need to come to terms with its domestic and external debt situation and is expected to begin talks with the IMF and reschedule its external debt.”

He, however, cautioned that policy reforms without institutional modifications would exacerbate the situation.

Earlier in his welcome address, LCCI President, Mr Gabriel Idahosa, said policy reforms by the government, especially the removal of fuel subsidies and floating of the exchange rate, are expected to boost fiscal revenue and contribute moderately to the improvement of the country’s growth this year.

Also speaking at the event, Director General, Budget Office, Ben Akabueze, said one of the challenges facing the nation is that of low public revenue against a growing population.

He said Nigeria has had over three decades of deficit budget.

He shut down the opinion of some analysts that the country needs to spend less, arguing that what the nation needs to do is to spend efficiently and not less.

FreeStuffsNG:
He shut down the opinion of some analysts that the country needs to spend less, arguing that what the nation needs to do is to spend efficiently and not less.

mrvitalis:

I don't know what metrics he is using but for me naira is over valued at 1300

If I were president I would devalue to #1700 then aggressively defend it there as I would have the liquidity to do so

Key thing is we need to identify key areas we have global comparative advantage.. ( what we can produce cheaper than most part of the world or what we have the potential to produce cheaper than most of the world) and heavily provide credit facility to this sectors

Driving export, increasing for example earnings

If we remove the subsidy on electricity and invest 700bn as loans to bank at 3% interest rate to be given to only players in the cassavacassava/ sweet potato to ethanol industry... I believe we can catapult that industry to a multi billion dollars industry creating millions of jobs and getting our investment in 10 years max

mrvitalis:
I don't know what metrics he is using but for me naira is over valued at 1300

If I were president I would devalue to #1700 then aggressively defend it there as I would have the liquidity to do so

Key thing is we need to identify key areas we have global comparative advantage.. ( what we can produce cheaper than most part of the world or what we have the potential to produce cheaper than most of the world) and heavily provide credit facility to this sectors

Driving export, increasing for example earnings

If we remove the subsidy on electricity and invest 700bn as loans to bank at 3% interest rate to be given to only players in the cassavacassava/ sweet potato to ethanol industry... I believe we can catapult that industry to a multi billion dollars industry creating millions of jobs and getting our investment in 10 years max

FreeStuffsNG:
His words, “The naira is undervalued by 33.58 percent at the parallel market rate of N1,285 per dollar and 4.16 percent at the NAFEM rate of N890.54 percent.”


He shut down the opinion of some analysts that the country needs to spend less, arguing that what the nation needs to do is to spend efficiently and not less.

Brilliant economic analysis many will still struggle to comprehend. Smh.

Keep your naira! Naira is currently undervalued. If you exchange your naira for a USD, you are actually exchanging your wealth for poverty by overpaying for the overvalued US dollar.

Expect a boon in the economy and a massive leap in our national aggregate output. Subsidy removal alone will fetch us about N4 Trillion while free float of the naira fetches Nigeria another N4 trillion, this total N8 trillion would have been converted to US dollars and exported overseas but for the brilliant and patriotic leadership of President Bola Ahmed Tinubu.
May God bless Nigeria for ever! Check my signature for free stuffs!

FreeStuffsNG:
His words, “The naira is undervalued by 33.58 percent at the parallel market rate of N1,285 per dollar and 4.16 percent at the NAFEM rate of N890.54 percent.”


He shut down the opinion of some analysts that the country needs to spend less, arguing that what the nation needs to do is to spend efficiently and not less.

Brilliant economic analysis many will still struggle to comprehend. Smh.

Keep your naira! Naira is currently undervalued. If you exchange your naira for a USD, you are actually exchanging your wealth for poverty by overpaying for the overvalued US dollar.

Expect a boon in the economy and a massive leap in our national aggregate output. Subsidy removal alone will fetch us about N4 Trillion while free float of the naira fetches Nigeria another N4 trillion, this total N8 trillion would have been converted to US dollars and exported overseas but for the brilliant and patriotic leadership of President Bola Ahmed Tinubu.
May God bless Nigeria for ever! Check my signature for free stuffs!

FreeStuffsNG:

Since you made it about your own view against his expert view with the @bolded, please which school did you study? What did you study? What data do you have to counter the empirical and factual analysis by the renowned Economist, Mr Bismarck Rewane?

While it's not impossible to challenge the expert opinion of Rewane, It will be more rewarding to everyone reading your comment if you provide your own contrary views intellectually to counter him.