By Danlami Nasir Isah
With the free fall of the naira in recent times, development and real estate experts have express fear that the impact of the high exchange rate may impact negatively on the sector.
Currently, the naira trades between N580 and N600 to $1, and is even going for the worst, following the recent ban on the Bureau de Change (BDC) operators.
The Central Bank of Nigeria (CBN) also accused AbokiFx and other black market operators for conniving to weaken the naira, while vowing not to back down on the recent ban on foreign exchange.
The apex bank, however, vowed that it will not back down.
A development expert, Musa Ibrahim, said that the rate at which the naira is depreciating would have a far impact on real estate.
“Cost of building materials, especially imported ones, will increase and this will be passed on to off-takers as higher prices of real estate. Also, existing projects may suffer some setbacks, including delays or outright project abandonment, because of naira depreciation. Similarly, new housing projects will be impacted, depending on source and currency of funds. Furthermore, the attraction of real estate investment, as a store of value, maybe impacted negatively by the free fall of naira,” he said.
Another real estate developer with Adron Homes, Mr. Kunle Wasiu, pointed out the policy inconsistency and lack of stable and sustainable strategies.
“The market is fragile and negatively affected by the continuing rising exchange rate, which has affected (the) cost of building materials and labour in the built environment. So, real estate pricing will never be the same again.
“Prices (have) gone up, while cost of borrowing is higher, and financial institutions are not willing to lend to grow real estate stock as they prefer to advance facilities on a short-term basis,” Wasiu said.
CBN’s defense
Reacting to calls for the resignation of the CBN Governor, Mr. Godwin Emefiele, due to the weakened nature of the naira, the spokesman of the CBN, Mr. Osita Nwanisobi, has faulted claims from certain quarters for the resignation of Emefiele over issues that are related to the exchange rate of the naira.
Speaking with newsmen in Abuja recently, Nwanisobi alleged that those behind such calls were only pursuing their selfish agenda, fueled by those who had long benefitted from rent-seeking practices in the parallel forex market, which he refused to recognise as a significant segment of the country’s forex market.
According to him, the CBN would not be distracted in its mandate by yielding to the selfish tendencies of a few to the detriment of the majority. He, therefore, urged the banking public to disregard the claims that are aimed at impugning the reputation of the Bank, insisting that it remained committed to carrying out its mandate for the good of Nigerians.
Meanwhile, Nwanisobi has assured that the CBN remains committed to meeting the foreign exchange request of travelers with legitimate needs, as they relate to travel allowances, payment of tuition and medical fees among other needs.
He noted that there was enough supply of foreign exchange to the banks to meet legitimate demands for foreign exchange.
Nwanisobi, who insisted that no customer requiring foreign exchange for genuine transactions would be turned back by their banks, urged the banking public to insist on their rights to be attended to as long as they possess all the requisite documents to validate their request.
Reiterating Emefiele’s stance on the willingness of the Bank to meet the demands of customers, the spokesman said that the CBN would not hesitate to approve foreign exchange for customers with legitimate demands that exceed transaction limit insofar as the application is supported with specified requirements.
While restating the decision of the Bank not to revisit the issue of allocation of foreign exchange to the BDC operators, Nwanisobi argued that such a practice was not sustainable in the long run, considering that many of the BDCs had since deviated from the purpose for which they were issued licenses in the first instance.
Insisting that the rate in the CBN-unrecognised parallel market was not the reference rate of the naira, Nwanisobi also urged Nigerians to be wary of the activities of speculators who sought to manipulate the market for unpatriotic reasons.