Nigerian Presidential Candidate Says Fixed Exchange Rate Regime ‘Has to End’ — Touts Success of Fintech Unicorn Flutterwave – Featured Bitcoin News

A Nigerian presidential election candidate, Peter Obi, has said the local currency’s exchange rate against the dollar must not be fixed but must be determined “by the forces of demand and supply.” Pointing to the success of the Nigerian fintech Flutterwave, the candidate said if elected, his government will create an enabling environment for other startups to similarly thrive and succeed.

Two-Tier Exchange Rate Regime Attacked

A candidate in Nigeria’s upcoming presidential elections, Peter Obi, has said the local currency’s official exchange rate — currently pegged at just under N450 for every dollar — must be determined by market forces. Obi is among three candidates running to succeed President Muhammadu Buhari. He also cast doubt on the current two-tier exchange rates regime.

These remarks were made by the Labour Party candidate just over one month after the naira plummeted to its lowest exchange rate against the US dollars. Bitcoin.com News reports that in July the naira hit an all-time low at N710/$1. In response to the naira’s then quick-fire depreciation, the Central Bank of Nigeria (CBN), which last devalued the naira in May 2021, blamed speculators.

Immediately following the CBN’s allegations, Nigeria’s anti-corruption body, the Economic and Financial Crimes Commission (EFCC) descended on currency dealers and bureau de change operators in and around the Wuse Zone 4 area of Abuja. The EFCC’s raid on currency speculators initially appeared to spark the naira’s recovery. However, more than a month later, the naira’s exchange rate had returned to over N700 per dollar.

‘A Contractionary Monetary Policy’ Envisioned

Twitter thread which outlined his plans for the country should he win the presidency, Obi suggested a solution that he said can end the naira’s woes. He explained:

Truth is, the rate at which the naira converts to foreign currencies has not been decided by the market for many years. Two-tier foreign currency regimes are a mistake. This must end. The forces of supply and demand will determine the exchange rate. This is it.

Labour Party’s candidate for the election stated that, in addition to abandoning fixed exchange systems, his government would not use price or wage control to combat inflation. Instead, it will “pursue a contractionary monetary policy.”

Obi also mentioned Flutterwave, the Nigerian fintech startup that became a billion dollar company. To ensure that more startups similarly succeed, Obi said his government “will create an enabling environment for our startups to thrive.” This will be done by enforcing a legal framework that protects both “foreign investors and their indigenous partners.”

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Terence Zimwara

Terence Zimwara, a Zimbabwean journalist, writer and author who has been awarded the Zimbabwe Booker Prize. His writings have covered the economic problems of several African countries and how digital currency can offer an escape route.