Financial experts on Tuesday predicted that a further devaluation of the Naira would slowdown economic activities and deepen a current lull in the nation’s capital market. The experts who kicked against further devaluation of the currency called for urgent diversification of the economy to increase revenue generation.
They told pressmen in Lagos on Tuesday, that devaluation would not address the current economic challenges facing the country. Mazi Okechukwu Unegbu, former President, Chartered Institute of Bankers of Nigeria (CIBN) said devaluation would not have the needed impact in a mono-product economy.
Unegbu said that the Federal Government should map out strategies that would aim at diversifying the economy to increase the revenue generation in line with the present realities. “Diversification is the main thing, if you devalue the Naira, the problem will persist because it will not help in addressing the economic shortfall,” he said.
Unegbu suggested that Nigerians should be prepared for harder times with a further devaluation. He attributed the current scarcity of foreign exchange to the unfriendly Bureau De Change (BDCs) policies of the Central Bank of Nigeria (CBN).
Mr Bayo Adeleke, the National Secretary, Independent Shareholders Association of Nigeria (ISAN) said there was no justification for calls for further devaluation of the naira. Adeleke said, “devaluation makes the citizens poorer in an import-dependent economy, kills local enterprise; using foreign raw materials weakens citizens’ purchasing power and living standards.”
The secretary said the capital market would be the worse with further devaluation.
He noted that Nigerians would patronise the market less due to rising cost of living while foreigners would buy up the companies because of exchange advantage at their disposal. Adeleke said the naira would become weaker against major currencies with fewer dollars you could get so much Naira.
He added that foreigners would remain the major players in the market. “With so much naira you purchase many shares. And Nigerians battling with survival cannot acquire shares”. A turnover of 1.45 billion shares worth N26.41 billion exchanged in 18,110 deals compared with a total of 1.28 billion shares valued N31.29 billion traded in 19,143 deals in the preceding week.
The financial services industry led the activity chart with 919.07 million shares worth N8.39 billion traded in 10,033 deals. The Construction/Real Estate Industry followed with a turnover of 187.94 million shares worth N9.46 billion achieved in 274 deals. The third place was occupied by the consumer goods industry with 143.34 million shares worth N6.003 billion transacted in 3,031 deals.
Meanwhile, the All-Share Index last week dropped by 404.41 points or 1.22 per cent to close at 32,853.49 compared with 33,257.90 achieved in the previous week due to price depreciation. Also, the market capitalisation, which opened at N11.353 trillion lost N138 billion or 1.22 per cent to close at N11.215 trillion.
Vono product topped the losers’ chart in percentage terms, dropping by 21.38 per cent or 31k to close at N1.14 per share. Evans Medical trailed with a loss of 16.98 per cent or 27k to close at N1.32, while Champion Breweries dropped by 10.43 per cent or 73k to close at N6.27 per share.
On the contrary, Neimeth led the gainers’ table in percentage, increasing by 11.72 per cent or 15k to close at N1.43 per share. Mobil Oil followed with a gain of 6.61 per cent or N9.85 to close at N158.85, while AIICO Insurance gained 5.43 per cent or 5k to close at 97 per share.