By Obafemi Oredein
IBADAN, Nigeria–Nigeria’s new foreign exchange policy announced this week will lead to the expansion of cocoa production and other benefits for the sector, the head of the country’s national cocoa body said Friday.
Under the policy, the Central Bank of Nigeria on Wednesday allowed a free float of the national currency against the U.S. dollar and other global currencies, allowing the naira exchange rates to be determined by market forces.
The official exchange rate was fixed by the central bank, when the West African country had multiple exchange rates. The new policy is aimed at unifying the multiple exchange rates, the government said.
Cocoa industry officials said with the float of the naira, exporters will no longer worry about being shortchanged whenever they repatriate the proceeds of their exports through the country’s investors and exporters window, where the exchange rate will now be determined by market forces.
Muftau Abolarinwa, president of the Cocoa Association of Nigeria, said the policy will lead to more inflow of dollars into the country, creating a level playing ground for cocoa and other exporters, more income to cocoa farmers and bring rationality into export-oriented businesses in Nigeria.
“Most of the people exporting that are having two or three accounts overseas, that are not bringing their money [into Nigeria] will have no choice with this openness with this present government, more inflows will come into the country,” he told Dow Jones Newswires.
He said the government should be expecting more inflow when the main crop cocoa harvest starts in September or October, adding that people will bring in more dollars as the government has given assurance that the exporter and commercial bank will agree on the rate the exporter wants in order to exchange dollars for the local naira currency.
This will also enhance the expansion of the production of cocoa in the country as amid more input, farmers will be more willing to increase production, Abolarinwa said.
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