The former Speaker, House of Representatives, Yakubu Dogara has urged the Federal Government to improve inward remittance of funds by Nigerians in the Diaspora.

Dogara, who stated this recently in Lagos at the Platform Nigeria with theme: ‘Democracy and the Free Market Economy,’ noted that Diaspora funds are excellent and reliable sources of funding development in several developing and emerging market economies.

He remarked that there are said to be between 5 and 15 million Nigerians in the diaspora with remittances in excess of USD20 billion, adding that this is more than 80 percent of FGN’s Budget.

He explained that these funds do not go through the proper channels, and the CBN is unable to reap the benefits of foreign currency transfers, noting that again, Nigeria must make an attractive value proposition to its citizens abroad to engender their confidence and attract remittance through proper channels.

Dogara further explained that government should raise loans from Nigerians with large FX holdings by applying moral suasion, adding that Nigerians at home and abroad are said to hold substantial amount of FX in domestic and foreign domiciliary accounts, which are currently idle.

The former House of Representative Speaker disclosed that for Nigeria to reach some understanding with holders of these funds, two conditions must be met; the government is able to build trust and engender confidence in the economy, and the holders of the funds are sufficiently incentivised to act, and the incentives would have to be agreed upon mutually.

He revealed that forex exchange crisis is by far the major malaise afflicting the economy at the moment, pointing out that in June 2023, the Central Bank of Nigeria (CBN) undertook a critical policy decision to implement a new foreign exchange policy that provides for a unified and free-floating exchange rate.

He added that the exchange rate of the local currency to the USD (and indeed, to all other currencies) would henceforth be based on freely priced transactions between willing buyers and willing sellers in the official market.

According to the statement, “Since then, the Naira has depreciated against the USD in both the official (NAFEM) and parallel markets. This has seen the value of Naira cascading to a near death downward spiral in the parallel market where it has lost more than 100 percent of its value.

“Governments all over the world are tasked with strengthening the value of their national currencies for obvious reasons including but not limited to the following: (a) Strong currency increases the purchasing power of citizens and enterprises in the country. (b) The stronger a currency the more likely the surge in investor confidence because foreign investors make rational choices and are more inclined to invest in countries with strong currencies, as they stand to gain higher returns on their investments when converted back into their home currencies. (c) A strong currency is frequently associated with stability and prosperity. In other words, it determines the health of a nation’s economy. As we can see, a strong currency creates humungous surface-level and nuanced advantages for citizens.

“So many reasons have been adduced by pundits to be responsible for FX rate instability in Nigeria, which to my mind are a complete technical application of economic theories that do not capture the reality on the ground. I agree with the slogan that we must transform to thrive by transiting from a consuming economy to a producing one. That is rational, but it is not the cause of our FX volatility. I believe the Naira is grossly undervalued. This is because the most productive nations are not necessarily the nations with the strongest currencies.”