Can Nigeria achieve a unified Fx market?

Nigeria's President, Bola Tinubu, has recently reiterated the government's commitment to achieving a unified foreign exchange market. The goal is to attract and boost the confidence of investors in the country. The discussion surrounding the unification of the FX market brings to light various challenges and opportunities that Nigeria needs to navigate to ensure a successful transition. Ajibola Tobi-Osho, the Vice President of Sales & Trading at Zedcap Partners, joined CNBC Africa for a detailed discussion on the matter. Tobi-Osho shed light on the importance of unifying the exchange rates and emphasized the need to focus on bridging the gap between the official rates and the parallel markets. By creating a free form of market where rates float, it can potentially restore confidence among investors. The fear is that simply unifying different windows without addressing the underlying demand and supply imbalances may not yield the desired results. While unification is crucial, increasing the supply of foreign exchange is equally vital to ensure stability in the market. One of the key concerns highlighted in the conversation is the steady decline in foreign exchange inflows, posing a significant challenge to Nigeria's FX market. Without an adequate supply of foreign exchange, unification alone may not be sufficient to address the complexities of the market. Tobi-Osho stressed the importance of implementing reforms, enhancing investor confidence, and fine-tuning fiscal policies to create a conducive environment for market unification. The discussion also touched upon the issue of potential Naira devaluation. Tobi-Osho acknowledged the possibility of devaluation in the future, citing the unsustainable nature of trying to maintain an overvalued currency. He emphasized the need to face the reality of the Naira's value against the dollar and suggested that devaluation might be necessary to stabilize the economy. In conclusion, achieving a unified FX market in Nigeria requires a holistic approach that addresses both structural reforms and supply-side challenges. The journey towards unification is fraught with complexities, but with strategic policy interventions and a focus on increasing foreign exchange supply, Nigeria can pave the way for a more stable and attractive investment environment.