Nigeria’s multiple exchange rate policy worries WTO – Okonjo-Iweala

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The Director-General of the World Trade Organization (WTO), Dr Ngozi Okonjo-Iweala, has said the world body is worried about Nigeria’s multiple exchange rate regime and how it will affect trade.

Fielding questions after a meeting with President Muhammadu Buhari at the presidential villa, Abuja, on Monday, she said some member states have equally complained about Nigeria’s invoking the balance of payment agreement to make to be able to conserve foreign exchange.

Nigeria’s Central Bank had March last year said that it will migrate to a single exchange rate for the naira by collapsing the multiple exchange rate policy that determined the value for the local currency.

Responding to the question if the WTO was concerned with the multiple exchange rate regime in the country, Okonjo-Iweala, who was the former Nigerian Minister of Finance and Coordinating Minister for the Economy, said: ‘Yes. WTO has one of the agreements of the balance of payments, and Nigeria certainly invoked this to be able to conserve foreign exchange. Its a book list article. But some other members have brought a complaint against us (Nigeria) that we shouldn’t have used this article in that way. So, yes, the WTO is concerned about foreign exchange, the way we manage it, the way we use it and how we use it to support manufacturing or imports and exports in our economy.

‘And I think that we had that discussion with them, they complaints about the exchange rate regime and we (Nigeria) try to explain. I shouldn’t say we because I’m now DG WTO, it is for Nigeria’s representative to explain to the WTO, to those members complaining why we’re doing this. But eventually, I think having a strong exchange rate and being able to phase out of this, I think we’ll be heading in that direction. We’re also going to see the governor of the central bank, and will undoubtedly discuss some of these issues.’

She also allayed fears that embracing the free trade policy of the world body would harm Nigeria’s economic diversification drive.

Okonjo-Iweala affirmed that special and differential treatment could be applied to prevent vulnerable countries from collapsing under completion.

She added that the special treatment would not be forever as such countries would have to eventually open up for competition.

She also said duties could be applied to imports to prevent the country from being a dumping ground.

Okonjo-Iweala admitted that despite lifting millions out of poverty, free trade has not been beneficial to all especially women, saying that in recognition this, the WTO has a deliberate policy to support women.

She said she had discussions in many areas with President Buhari on how the WTO could do not improve the Nigerian economy.

According to her, there is a unique opportunity for the country to improve its standing in trade and add value to its products especially agriculture.

While noting that Nigeria’s shea butter was denied access to the United States and European markets because of poor quality, she said the country could ‘trade more, export more and add value to its products.’

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The DG noted that Nigeria must out-market others, stressing that there is a high demand for the country’s fashion in other African countries but it has not been able to leverage on it.

On COVID-19, Okonjo-Iweala advised Nigeria to set up local vaccine manufacturing as she noted that coronavirus would not be the last pandemic.

Okonjo-Iweala has also warned that Nigeria will be running into an economic crisis in the nearest future if the country does not start diversifying from its reliance on fossil fuels now.

She said the need for Nigeria to begin its gradual move away from reliance on oil was one of the issues she discussed with President Buhari.

According to her, now should be Nigeria’s transition period from fossil fuels to renewable energies, noting that most countries of the world are already giving timelines banning use of equipments, including cars, using fossil fuels.

She expressed the concern when reacting to the feat achieved by the Dangote Refinery, which she said is a commendable achievement, noting however that the days of its relevance would be affected by the fact that the world is moving away from oil and gas.

‘Well, it’s the largest refinery, I wish we had done it years ago. If we had done it earlier and encouraged Alhaji Dangote, who is doing a very good thing, it could have been better because right now we would have been able to have our own oil refined here and not having to import, but we are where we are and I think he’ll be able to service other countries on the continent, I mean his cement industry is already in 16 or more countries.

‘So, he’ll be able to export. But the one thing about the refinery and so on is even as he’s doing that, we’re using it and exporting, we also have to start looking at the horizon where many countries are now moving to electric cars and many developed countries where cars are manufactured or not, have said that from 2025, I think Norway said from 2030 and on, they are banning any cars that use petrol. Diesel is already out

‘So, we have to start transitioning this Nigerian economy into other areas, where we will be able to create jobs and earn foreign exchange and that’s why I spoke at length. If we don’t start, we will find ourselves at the end of a couple of decades with no way of being able to make an additional foreign exchange for some of the products we need.

‘So, as a country, we really have to go into strong reflection, we have a period of transition, how are we going to use it. That is one of the things we face. So, yes, it’s great now and we congratulating him, but we have to start thinking how do we transition from fossil fuels and I’m really worried about that. We need to have a game plan to get there,’ she said.

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