The Institute of Chartered Accountants of Nigeria,I CAN, has said that the unification of the country’s exchange rate would stimulate the growth of the securities market and attract foreign investments into the country.
A statement by the institute said that the previously adopted double-window exchange rate played a huge contributory role in fueling high inflationary pressure, corruption, high debt burden and reduced investments into the country.
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It noted that the unification of the exchange rate would increase the government’s revenue in naira terms, which would result in a higher tax/revenue to GDP ratio.
The statement read partly, “The inflow of capital from foreign portfolio investors into the Nigerian capital market will help grow the market and allow companies to raise capital efficiently to finance their growth ambitions.
“It is expected that the unified exchange rate will serve as a catalyst for investment flows into the country, which will boost our foreign exchange reserve, grow the economy, create employment, and improve the quality of life. Foreign portfolio investors are expected in the near term whilst foreign direct investors that require more investment appraisal time will come in subsequently.”
ICAN
On the flipside, the institute said corporate tax collection may decline as many businesses would experience foreign exchange losses due to the higher exchange rate.
It also noted that the service cost of the government’s external debt which is denominated in foreign currency, would go up, adding that Nigeria’s current public debt, which currently stands at over $40bn would increase by N12tn.
Upshort
