February 25, 2020

West African single currency threatens Nigeria’s fiscal policies – Emerging Africa CEO

West African single currency threatens Nigeria’s fiscal policies – Emerging Africa CEO

Peter Egwuatu

The Chief Executive Officer of Emerging Africa Group, Mrs. Toyin Sani, said on Monday the proposed single currency for West African countries would pose a serious threat to Nigeria’s monetary and fiscal policies.

The Emerging Africa CEO said in a chat with our correspondent that economic growth in Sub-Sahara Africa was under pressure and the key players such as Nigeria, South Africa, Kenya, and Rwanda should manage their fiscal and monetary policies to stabilize the economy.

Sanni, who reviewed some global economies, including Nigeria, advised that all projections are reviewed downward because of the ongoing coronavirus that has become a source of global concern.

She said: “Countries should adjust their projections in the wake of coronavirus which was not factored as a risk element initially. For instance, China is a key driver for crude oil for Nigeria. Therefore, if China has challenges in crude oil, it will affect Nigeria. The Central Bank of Nigeria’s policy on Open Market Operations (OMO) has impacted positively on the stock market activities but our concern is the sustainability of the policy.”

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On the commitment of African Countries to the African Continental Free Trade Area  (AfCFTA), she added: “The introduction of Eco as the single currency in West Africa can eliminate some challenges, but it will limit Nigeria’s ability to manage its fiscal and monetary policy effectively at the moment. This is why some of us believe that Nigeria needs to put some structures in place before embracing a single currency in West Africa.

“Single-digit interest rates are good for the real sector and capital market. But we must appreciate that volatility is part of the market. We should encourage investment in both equities and fixed income securities. We must avert mismatch in our asset allocation.  The outlook for Foreign Portfolio Investors (FPI) in Nigeria is highly stable.”