The ‘fair value’ of the naira should be about N250 to the US dollar, say chief financial officers of major organisations in Nigeria, in a recent survey carried out by BusinessDay Research and Intelligence Unit (BRIU).
The survey was conducted at Four Points by Sheraton Hotel, Victoria Island, at a conference organised by the Chartered Global Management Accountants (CGMA) Institute for CFOs and Chartered Accountants of major organisations in Nigeria.
The event, which was attended by over 100 top private organisations, 46 percent attending CFOs picked N250 as the fair value of the naira, based on standard metrics and industry experience. But 21 percent picked between N251 and N350 to a US dollar, while 33 percent are of the opinion that the naira’s fair value should be above N350 to the US Dollar.
The survey did not ask the CFOs to justify the basis for their choice. The naira currently trades at about N306 for official transactions, but at about N360 for retail customers and about N385 in the black market. It fell to as low as N520 to the US Dollar in February before appreciating sharply after the Central Bank of Nigeria (CBN) increased its supply of dollars in the official market. The CBN has always insisted that the black market exchange rate is not a reflection of the true value of the naira and is mainly driven by speculation and manipulation. Even though some financial analysts insist that the official rate also does not reflect the actual value of the naira.
Respondents to the BRIU survey came from different sectors cutting across banking, insurance, manufacturing, power, telecoms, food and beverages, oil and gas and consulting.
On their outlook on the Nigerian economy, 18 percent of responding CFOs had a negative outlook on the economy but 44 percent said the outlook is positive while 38 percent needed more time to predict the direction of the economy.
Also, 46 percent expressed their support for the recent decisions of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to retain the existing rates on monetary policy rates while 21 percent disagreed with the decisions of the MPC and 33 percent pleaded for more time in order to make an informed decision.
A good number of the CFOs said their plans for this year include expansion of their businesses; controlling operational costs; maintaining existing business sizes while some are opting for mergers and acquisitions. The major risks faced by their businesses presently, include exchange rate risk, inflation risk, default and political risks.
BRIU administered the same survey at the Agribusiness and Food Security Summit organised by BusinessDay on 23 March. Only 30 percent of the delegates supported the CBN decision on policy parameters and 15 percent disagreed while 55 percent were neutral. Furthermore, 58 percent of the delegates said Nigeria’s outlook is positive while 42 percent remained neutral.
Sixty five percent of respondents said their major risk they face was inflation, followed by exchange rate, political and security risks.
The CGMA conference otherwise known as CGMA Speaks Series was organised to improve executive decision making as executives had agreed that flawed information had been used to make decisions. The conference was attended by over a hundred CFOs and was presided over by Andrew Miskin, CGMA MIET, president CIMA and chair, the Association of International Certified Professional Accountants. Other important dignitaries in attendance include Foluso Phillips, executive chairman, Phillips Consulting; Sam Nwanze, chief investment officer and director finance and investments, Heirs Holding Plc; Susan Abisola Giwa-Osagie, executive director, business development, NEM Insurance Plc and Paul Anyim.
In his opening address, Andrew Miskin, President of CGMA, advised the delegates to consider the many ways change affects the way management accountants make decisions. “Management accounting is about improving decision making. We have to be ahead of the game because of the speed of change. These days, things are happening very fast as in every two weeks new products are released”, he said. He urged them to focus on the speed of change, impact of the technology-enabling environment, and the changing value.
Other panellists advised those in attendance to consider taking decisions at the right time. Executing projects at the right time could only be possible if they avoided business models that have many layers. “Bureaucracy is everywhere especially in multinationals. Think about the customers, be transparent and work in collaboration, decision making process will be better”, Miskin added.
TELIAT SULE AND OMOSOMI OMOMIA
