The Central Bank of Nigeria’s temporary measures seeking to protect the local currency have come under strong attack with a leading financial analyst describing the measures as dangerous.
“The measures by CBN are not just temporary but are also dangerous, our challenges are not isolated as what happens in China affects us as well,” Zuby Emodi, Financial Analyst told CNBC Africa.
He lashed out at CBN’s defiant stance on refusing to devalue the naira.
“Nigeria on the human development index is ranked 187th in the world but surprisingly we are fighting devaluation when countries with better indexes are [going that route],” he added.
(READ MORE: Is the naira over-valued?)
Nigeria’s naira has experienced a lot of volatility this year, especially at the parallel market.
The Central Bank of Nigeria has come through with a number of strategies to defend the naira, from tactical devaluation, policies to curb importation, to restrictions on dollar deposits at banks.
Emodi says the CBN was better advised to engage policies that will attract foreign investments.
“It’s better for the CBN to enact policies that will control foreign portfolio investment so that we can monitor investment coming into Nigeria,” said Emodi.
He also warned that the country was also facing challenges related to drop in oil prices.
“In Nigeria we are facing an isolated case of mismanagement and oil prices drop. Unfortunately for us in Nigeria, over 90 per cent of our economy is dependent on oil revenue,” he warned.
“It’s not looking like it will get better anytime soon, the drop has continued from 2013 to now oil has lost 60 per cent of its value. Now oil is trading below 40 dollars a barrel and it is projected that it will drop further.”