Foreign exchange shortages have forced Nigerians to buy more locally produced products, an official has said.
Joseph Nnanna, deputy governor of the Central Bank of Nigeria, CBN, said this in an interview with Bloomberg.
Mr. Nnanna said that one advantage of the foreign-exchange shortage is that they forced Nigerians to buy more local products, including food such as rice.
“The craze for imported goods has declined,” the CBN official was quoted as saying. “Our consumption pattern is changing. We are producing what we used to import before.”
Commenting further, Mr. Nnanna said that the CBN would keep monetary policy tight even as dollar shortages persist.
“We are battling with liquidity as it were, so tight monetary policy will be for now,” Mr. Nnanna said.
The Monetary Policy Committee is scheduled to announce its decision on May 23.
Bloomberg reports that all but one of 21 economists surveyed said it would keep the main rate at a record high of 14 percent, a level it’s been at since July.
Nigeria faces scarcity of dollars since oil prices crashed in 2014, its economy contracting last year for the first time since 1991.
The central bank, which had imposed capital controls and tried to stop the naira falling, last month opened a platform for portfolio investors to trade the currency more easily and allow them to determine the exchange rate.
While investors welcomed the move, liquidity has so far been low, with only around $40 million traded daily.
But Mr. Nnanna said that it is picking up as the window starts to function properly and spreads between bids and offers are narrowing.
The CBN deputy governor explained that the aim was to “achieve convergence” between the naira’s different exchange rates.
“If we achieve convergence, I don’t think the window will be necessary anymore because you’ll have one exchange rate for the economy,” he said.
He, however, disclosed that the central bank will boost lending to agricultural businesses through its so-called intervention funds.
“We won’t lose sight of our developmental function, in the sense that if there’s a sector where we need to intervene, we will do so,” he said. “We are more bullish with the agricultural sector.”
Nigeria’s inflation slowed for a third month in April, put at 17.2 percent.
But it still remains almost double the upper limit of the CBN’s 6 percent to 9 percent target.