Forex Crisis: Nigeria Can Raise $50bn Yearly From Diaspora Bond Issuance To Save Naira- Prof. Ken Ife

ECOWAS Lead Consultant on Private Sector Development and a Member of the Governing Council, Ministry of Finance Inc. (MOFI) Nigeria, Professor Ken Ife, has said that the Federal Government can raise up to $50bn annually through the issuance of diaspora bonds, as the proceeds will be used to meet foreign exchange obligations.

Ife made the suggestion on Wednesday during an interview monitored on Arise TV, adding that the $50bn is enough to help restore the value of the naira.

His comment is coming amidst Nigeria’s foreign exchange crisis which has seen the naira crumble to N1300 per dollar at the Bureau de Exchange segment of the market and N847.77 at the Nigerian Autonomous Foreign Exchange Market.

Prof. Ife said, “Look at the damage speculation has done to the economy. Speculation is not just the $2bn that the Central Bank needs every month to meet their foreign currency obligation; $4.6bn is required for imports, and you now talk about another category that speculates on the economy using the dollar as a store of value and they don’t have any other business doing except to dollarise the economy.

“They immerse dollars and they sell. The forward sales of this dollar have become something else. It might even get to N1500 if things are not done.”

On 14 June, the CBN reintroduced the ‘willing buyer, willing seller’ model in the foreign exchange market

He said, “Go and look at what commercial banks have, and of course, I cannot exonerate commercial banks in the speculative arena because they are exploiting the willing buyer, willing seller thing where they just look at incoming forex and buy on some unknown price, and they fulfil all righteousness by going to the official market to consummate the transaction.”

He recommended that adequate measures be put in place to ramp up crude oil production so that proceeds of crude oil sales by the Nigerian National Petroleum Company Ltd. will be used to bridge part of the shortfalls.

Ife urged the government to “Start raising foreign instruments in our domestic economy. The diaspora for example, that is bringing you $26bn a year, can actually double to $50bn if they can buy these instruments.

“Dollar instruments that give them 7 per cent, they will buy that and remember that whenever we go out for currency bonds, we always get oversubscribed. Those people are looking at the fact that there are sovereign guarantees around those bonds and they know that they will get their money, so they buy it at 7 per cent.”