THE EFFECTS OF COMPLETE DEREGULATION OF FOREIGN EXCHANGE MARKET ON BOTH FINANCIAL AND MANUFACTURING SECTORS OF NIGERIAN ECONOMY (1986-1993)
THE EFFECTS OF COMPLETE DEREGULATION OF FOREIGN EXCHANGE MARKET ON BOTH FINANCIAL AND MANUFACTURING SECTORS OF NIGERIAN ECONOMY (1986-1993)
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Date
2014-02-18
Authors
BASHORUN, KEHINDE ADETOLA
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Abstract
The value of Naira continued to drop appreciably since 1986
when the government embarked on market economic reforms,
especially the deregulation of Foreign Exchange System.
Though, from time to time the policy makers have adjusted
the mechanism for operating the market to make it more
efficient through various techniques.
The complete deregulation of Foreign Exchange was adopted in
1992, in the continued search for an appropriate exchange for
Naira. The significant effects of this major exchange rate
reform package on financial and manufacturing sector were
assessed.
The financial sector continued to withness a massive devaluation
of Naira, closure of gap between the official and parallel market
rates remained elusive of the policy makers, unacceptably high
interest rate persisted, making Naira very more unstable. Also
competition against parallel market was hampered as a result of
too much documentary requirements and other restrictions of the
CBN.
Furthermore, manufacturing sector experienced high cost of fund,
accessibility to loanable fund was difficult, depressed demand
of manufactured goods and continuous hike in prices by manufacturers.
To achieve exchange rate system stability, government should
continue to encourage non-oil exports in order to boost supply
of Forex through number of structures and incentives.
Manufacturers should be allowed to retain 100 percent of
their export proceeds in forex. Government should encourage
petro-chemical industry which is the source of raw materials
supplies of manufacturers. Liquidation of terminally distressed
financial institutions ordered and debt recovery and credit
enforcement through the exercise of legal remedies should be
reviewed to ensure that culprits are effectively brought to
book.
Description
REG. NO. G90BA7130
INSTITUTE OF ADMINISTRATION
AHMADU BELLO UNIVERSITY
Z A R I A.
Keywords
EFFECTS,, COMPLETE,, DEREGULATION,, FOREIGN,, EXCHANGE,, MARKET,, FINANCIAL,, MANUFACTURING,, SECTORS,, NIGERIAN,, ECONOMY (1986-1993)