Former governor of Central Bank of Nigeria, Mr. Ola Vincent has called for the establishment of small-scale industrial scheme comparable to the Agricultural Credit Guarantee Scheme.
Mr. Vincent who spoke on the occasion of honouring Mr. A. Olashore with the award of Banker of the Year on Wednesday, suggested a N250 million capital which has to be paid in two consecutive of N100 million and N50 million on the third year. In his opinion, interests on loans based on this scheme should not be higher than 15% or which ever is the CBN discount rate.
Mr. Ola Vincent also proposed the setting up of venture capital by commercial and merchant banks in the country tot he tune of N500 million with an initial paid up capital of N300 million. The capital base he suggested should be allowed to banks according to their present CBN categorisation or any other convenient method.
This he said, would inject some capital into the economy and allow banks to participate in venures they fund.
In his own contribution as guest on the occasion, Dr. Pius Okigbo said that before SEEM, the naira was said to have over valued, but now the problem is that the naira is grossly under valued.
According to the economist using conventional economic method to determine the exchange rate via the terms of trade, the true value of the naira ought to be N2.00 to the dollar.
The low value of the naira attributed to the inelasticity of the supply of foreign exchange which is pegged at $100 million while the demand for foreign exchange is elastic.
According to Okigbo the FEM is not totally free especially as the supply is still stage managed by the monetary authorities.
Dr. Okigbo is of the view that the naira could achieve a stronger position against the falling dollar if the demand for foreign exchange is managed. In his words, the organisation of demand for foreign exchange by banks would ease off the pressure on the naira. Dr. Okigbo said it is uninformed persons and those who have failed to apply the machinist of elementary economics to our present predicament that are calling for the abolition of foreign exchange market and the naira.
According to him, even when the naira is abolished the new currency would still face the same problem as the strength of an economy gives its currency a strong foreign exchange rate