Oluseye Olusoga, Managing Director and Chief Executive Officer, Parthians Partners Limited has disclosed that the task to turnaround the economy by the government of President Bola Tinubu is a difficult task. For instance, he pointed out that unifying the exchange rates which is a key policy direction to attract foreign investment which is at its lowest ebb in about 15 years is herculean but must be achieved. In this interview with BAMIDELE FAMOOFO, the Parthian helmsman also speaks broadly on the Nigerian economic reforms proposed by the 16th President of Africa’s largest economy.
What would it take for Nigeria to successfully unify exchange rates as this is one of the priorities for President Bola Tinubu?
Unifying exchange rates is a difficult task that must be done and would require a lot of courage to achieve. An attempt to unify the exchange rates in Nigeria would imply some level of official devaluation, however, would also bring additional benefits. Once the rates are converged, there will be better free flow of money and reduced arbitrage concerns. However, accomplishing this task is challenging due to the rising cost of living and the need for people to adjust to the new normal. Nonetheless, I believe it is necessary for Nigeria to reach its full potential. Rather than a gradual approach, the process should be market driven. To achieve this, Nigeria should increase its daily oil production for exports and diversify into sectors such as mining to generate foreign exchange. The Central Bank of Nigeria can act as a regular market participant, trading excess dollar supply to meet demand. The laws of supply and demand would help stabilize the market.
How should Nigeria pace itself to achieve this sort of monetary policy?
As the former president of the World Bank Group once said, a slow unification process often results in no unification at all due to pushback and vested interests. Therefore, the unification process should be swift rather than gradual. Although it may be painful, the impact might not be as severe as anticipated. For example, if the country were to announce a free float exchange rate of N780 or N760 per dollar, the rate would quickly drop to around N700 because people would stop hoarding. The limited number of people who have access to dollars at the current rate is worth considering. Furthermore, when prices are accurately determined, the law of supply and demand can help stabilize the market. This would allow us to shift our focus towards real production and functioning markets, presenting opportunities for everyone.
How well would you say Nigeria has been able to tackle issues of speculations in the currency market from the stop of allocation of forex to Bureau de Change operators in 2021 up till now and what are your thoughts on the CBN refuting that naira had been devalued to N630/$1?
Progress has been made since the allocation to Bureau de Change operators in July 2021. However, it is crucial to address the rumours and allow for open discussions. As people start to witness positive changes in the market, such as the appreciation of the Nigerian Naira when oil prices drop, they will gain confidence in the functioning of the market. Imposing restrictions or defending the currency through measures like tightening the number of items or maintaining subsidies hampers market efficiency and fair distribution of resources. Subsidies primarily benefit the wealthy rather than the average person. By eliminating subsidies, individuals can make wiser decisions and optimize their resources, leading to better outcomes. For instance, families with multiple cars for routine tasks within a small radius could consolidate their transportation to reduce traffic and expenses.
If we don’t pursue exchange rate unification, what cost implications do you anticipate Nigeria will have to face? Take for example, dollar denominated World Bank loans. If you look at our budget deficits, we cannot afford such. There’s an $800 million dollar World Bank loan Nigeria has secured to ease fuel subsidy removal transition. What sort of impact do you see Nigeria facing from such a scenario?
It all depends on what we do with the dollar loans. If we have such funds put into the economy at N465 for example, we have less naira compared to a rate of about N630, there’s a lot more naira however that feeds into driving inflation. It is more of a question of what Nigeria is using foreign sourced loans to do. If the money is invested in job creation, healthcare improvements, and infrastructure development, it will have long-term positive effects on the Nigerian economy. The focus should be on sustainable growth, rather than merely using the funds for salaries and debt servicing. The president has already made it clear that we should expect policies and reforms that would stimulate the economy and try to reduce triggering inflationary pressures.
“Subsidies primarily benefit the wealthy rather than the average person. By eliminating subsidies, individuals can make wiser decisions and optimize their resources, leading to better outcomes”
Can you talk to us about your career pathway?
Prior to founding Parthian, I had worked at Lehman Brothers London in the debt capital market before moving to Citibank as a trader within its Citigroup global markets in London. I hold a First Class (Hons) degree in Electronic Engineering from the University of Surrey and I am also an alumnus of the Said Business School Oxford, Warwick Business School, UK, and the Lagos Business School. I was a member of the Capital Market Master Plan Committee.
What exactly does your company Parthian Partners Limited Stand for?
Parthian Partners Limited is Nigeria’s premier traditional inter-dealer brokerage firm with a wide range of clients cutting across local and foreign banking institutions, asset managers, insurance companies, pension fund administrators, corporates, and development organizations. Established in 2012, Parthian Partners is licensed and regulated by the Securities and Exchange Commission of Nigeria and FMDQ.
At Parthian Partners, we strive for perfection daily in all that we do, to ensure our clients get the best service to achieve their goals. As a leading inter-dealer brokerage firm, we ride on our vast relationship and expertise to provide market intelligence and price discovery; facilitate trades between wholesale market participants; increase liquidity in OTC markets for off-the-run and illiquid debt instruments; bridge counterparty risk and match local and foreign trade interests.
Our track record speaks for us. Through excellent executions, we have facilitated over N5 trillion of FGN bonds and treasury bills since 2013 and over $1.2 billion in Eurobond transactions. In 2021, Parthian Partners became the first Inter-Dealer Broker in Nigeria to issue and successfully redeem an N20 billion Commercial Paper on the FMDQ Exchange.
Parthian Partners leverages technology and intelligence to also provide a bouquet of diverse financial services, as well as to create a seamless end-to-end process for its clients. The institution’s flagship digital platform for financial services, i-invest, gives customers access to investment opportunities from various financial service providers within one safe and secure platform. Our vision is to be Africa’s dominant market maker in fixed income, currencies, and commodities. Our goal is to be the wholesale broker of choice in the African OTC market. Our mission is to increase liquidity in the African OTC market whilst enabling our clients to achieve their economic goals.
