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U.S to engage Fed Govt on foreign exchange flexibility

Written by Maritime First
  • As Aviation workers petition minister over FAAN’s multiple taxes

The United States (U.S) has said it would this week, engage the Federal Government in talks to adopt a more flexible foreign exchange (forex) rate to boost growth and investment.

Its Assistant Secretary of State for Africa, Linda Thomas-Greenfield, told an audience at the U.S. Institute of Peace that Nigeria should ensure that the value of the naira versus the U.S. dollar was “more realistic.”

“While most people complain about the possibility of  a devaluation, people are already operating on a devalued currency, and the only people who are not, are people who are doing it officially.

“Our recommendation is, and we will have discussions about it … that they should look at the exchange rate and try to make the exchange rate more realistic to what the value of the naira is to the dollar,”Thomas-Greenfield was quoted to have said by Reuters.

She spoke before the talks  to be launched in Washington by Secretary of State John Kerry today. The talks will focus on Nigeria’s economy, security and development.

Nigeria faces its worst economic crisis in decades as the falling prices of oil has slashed revenues, prompting the Central Bank of NIgeria (CBN) to peg the currency and introduce curbs to protect forex reserves, which have fallen to an 11-year low.

Some members of CBN bank monetary policy committee have backed the devaluation of the naira.

Thomas-Greenfield said the parallel currency market in Nigeria was “alive and well,” warning that a rigid exchange rate, capital controls and import bans could undermine President Muhammadu Buhari’s efforts to expand economic growth and fight corruption. Buhari has rejected the idea of devaluing the naira.

“Capital controls that limit access to foreign exchange rewards insiders and undermines the stated goals of Nigeria to increase domestic production because both Nigerian and export investors alike tell us many businesses are unable to obtain the capital to purchase badly needed intermediate goods,” she said.

The naira trades some 40 per cent below the official rate in the black market versus the dollar. The CBN last year pegged the exchange rate to curb speculative demand for the dollar and conserve foreign exchange reserves after it restricted access to hard currency for imports of certain items, frustrating businesses.

The International Monetary Fund (IMF) has called on the Federal Government to lift the curbs and let the naira reflect market forces more closely, as the restrictions have significantly affected the private sector.

In the meantime, Aviation workers acting under the aegis of the National Union of Air Transport Employees (NUATE) have petitioned the Minister of State Aviation, Senator Hadi Sirika, over what they described as exorbitant and multiple taxes/fees imposed on handling companies by the Federal Airports Authority of Nigeria (FAAN).

The union, according to its acting general secretary, Olayinka Abioye, faulted  arbitrary imposition of punitive, irregular and multiple taxes by FAAN without recourse to established rules.

The union accused FAAN of gross insensitivity in the matter, which it said could trigger imminent crisis between the airport authority and ground handling companies, comprising Nigerian Aviation Handling Company (NAHCO) and the Skyway Aviation Handling Company (SAHCOL), on account of failure to carry them along before any increase in tariff.

NUATE said it was necessary to draw the minister’s attention to what FAAN had done by attempting to impose multiple taxes without carrying service users along with its attendant consequences on the industry.

Abioye listed the arbitrary charges imposed by FAAN on ground rent per square metre of office space per annum and workers are to pay N15,000 per annum.

Meanwhile, the President, International Civil Avia

tion Organisation (ICAO) Council, Dr. Olumuyiwa Bernard Aliu has arrived Nigeria on an official visit.

A Nigerian, Aliu is the first black man to  head the global civil aviation body.

During his visit, he will meet with President Muhammadu Buhari at the Presidential Villa, Abuja and other key stakeholders in the industry.

Spokesman of the Nigerian Civil Aviation Authority (NCAA), Sam Adurogboye, said the ICAO chief  will participate in  several other programmes lined up in the aviation industry.

ICAO Council Nigerian Representative, Mr. Martins Nwafor had arrived earlier ahead of the Aliu’s official visit to the country.

Before  his election on November, 18,  2013, he had served for eight years as the ICAO Council’s Nigerian Representative.

He was the pioneer Director of Air Transport Regulation (DATR) at the Nigerian Civil Aviation Authority (NCAA) from 2000 – 2004.

He succeeded Roberto Kobeh Gonzalez of Mexico.

During Dr Aliu’s 2014 – 2016 triennium, ICAO has established five comprehensive strategic objectives.

These are Safety, Air Navigation Capacity and Efficiency, Security and Facilitation, Economic Development of Air Transport and Environment Protection.

ICAO has 191 member countries.


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Maritime First