The Forex policy somersault by the Central Bank of Nigeria (CBN) is hurting the economy, depressing the capacity of manufacturers to keep industrial machines running to sustain employments and productivity.
Within days, the CBN forbade commercial banks from collecting foreign currencies as deposits from customers and reversed itself 12 January following deafening cries from crippled business organizations and frustrated individuals. Within the short period the ill-digested policy held sway, the value of the Naira crashed from N258-N305 to one Dollar. This was in spite of the pretentious assertions by the Federal Government and the CBN that they would not deliberately, as official policy, devalue the Naira.
What is intriguing and somewhat deceitful is that policies of financial authorities tended to devalue the Naira through the backdoor, somehow, via incoherent, trial and error policy decisions and confusion. While the CBN shut deposit banks out of receiving dollar deposits, the banks became Dollar cash strapped, unable to service dollar requests of Nigerians abroad, leading to limits being imposed on the amount withdrawals via credit cards. Nigerians and firms with legitimate transactions were stranded by the policy, which the CBN openly endorsed because it arose from its policy squeeze.
While the CBN policy handcuffed deposit banks from profitable transactions, the bank-restricted Dollars found ways into the street Forex market, which experienced a huge boom as frustrated citizens and firms needing urgent payments for children’s school fees, medical bills and vital machine parts abroad patronized street Forex markets, provoking massive erosion or unofficial devaluation of the Naira.
As the CBN froze official Dollar rate at N197 to one Dollar, the black market rate soared in a freefall to over N300 to one Dollar, thereby triggering factory shut downs as manufacturers could not buy Forex at such humongous rate to import raw materials and machinery and still produce and sell at competitive price in competition with goods imported from countries with better incentives for domestic manufacturing for export.
Rather than quickly redress its policy errors and confusion, the CBN said it was stopping the sale of foreign currencies to over 3,500 registered Bureau de Change that were largely suspected of fuelling large-scale money laundering of perhaps looted funds.
In the first place, unscrupulous CBN officials believably encouraged the BDCs to get Forex allocations for their clients using dubious documents to import, but with ultimate intention to export Forex to launder stolen public funds. They buy at official rate and make humongous profit of above N100 on one Dollar transaction. These unscrupulous Forex buyers can afford to buy at any high rate since the ultimate aim is to export Forex for sale in countries where it yields fatter dividends or for money laundering; not to do productive job-creating business in the country.
However, the genuine manufacturers with genuine documents to import materials and machines for productive job-creating purposes are often frustrated by CBN official red tape, which favours unscrupulous and dubious Forex requesters. CBN Governor Godwin Emefiele has often parroted that Nigeria is the only country in the world where foreign currencies are sold to street vendors and BDCs instead of banks. Yet, he has done little or nothing to stop such global aberration, but instead foisted conspiratorial policies that strengthen the aberration.
Is Emefiele suggesting that the apex bank is helpless in managing and nursing to sound health the nation’s financials and stopping parasites from further debilitating the economy? Or is the CBN leaderships holding the nation’s financial cow for a few financial cabals to milk to death, yet pretending to be managing the economy for productive purposes?
The curious voodoo management of the so-called excess liquidity mop up over the years, by many CBN governors, point to grave incompetence of reusing error- tools to manage the economy year in-year out and expecting right results. That is insanity, and it is no surprise the economy displays signs and symptoms of madness and nothing works.
That is why all global witchdoctors, including the ever patronizing, International Monetary Fund, are always jetting in to prescribe dubious medication for our self-imposed mad formula. Sadly, our clueless financial and monetary authorities are quick to lap foreign toxic recipes without domestication and analysis for domestic relevance. The rogue ears of financial authorities are ever open for junk advise, but deaf to hysterical domestic complaints. Can IMF advise China on economy?
Well, few weeks ago, the CBN eliminated over 40 items from accessing Forex, explaining the massive crash in oil revenues necessitated the restriction on buying Forex at cheap N197 official rate to import toothpick, rice, sweets and other nonessentials. The importers of these nonessential items were advised to source their Forex outside official source. Did a proactive monetary authority have to wait until national revenue crash to bar importers of nonessentials who are mainly Forex traders camouflaging as importers, buying cheap at official rate and selling high in the streets; round trippers and money launderers, all to the knowledge of CBN?
With Emefiele’s apparent incompetence, why still hold tight to the job or is he waiting to be disgraced out? How do you trust the judgment and credibility of the doctor of the nation’s financial health who accepts pieces of paper as authorisation to release hundreds of millions of dollars, ostensibly to buy weapons to fight insurgents, but for clearly dubious purposes by a federal government it should advise that the crooked, backdoor buccaneer process is offensive to village, not to talk of global, standards?
How do you trust the competence and integrity of Emefiele who spoke from both sides of the mouth regarding the Treasury Single Account (TSA) monumental scandal in which an e-platform firm was paid suspiciously fraudulent (N8 million or N25billion) unapproved, unauthorised by relevant superior authorities?
In the first place, Forex sale is not meant to be bastardized the way CBN does, hawking it to dubious customers that have no genuine transaction intention for importation of raw materials, spare parts and essential machinery to create and multiply jobs to help reduce massive, depressive poverty strangely in a major global oil and gas exporter.
The various chambers of trade and commerce and manufacturers associations have never relented in the past decade to decry the policy mismatch of CBN, which encouraged dumping of cheap foreign goods in Nigeria, depressing domestic production and forcing Nigerians to patronize cheap but largely inferior imports. No thanks to wrong policies and policy somersaults of the CBN and federal government, Nigeria has become the global dumpsite of fake and adulterated pharmaceutical medicines, inferior and substandard products, especially electrical and electronic, all jeopardizing life and property via high risks of fire hazards, deaths from fake drugs, etc.
The health regulatory agency, National Agency for Food, Drug Administration and Control, NAFDAC, and that of other materials, the Standard Organisation of Nigeria (SON) are both overwhelmed by the deluge of rubbish imported as goods. The other day, President Muhammad Buhari went to India, from where (along with China) most fake products and medicines come in cautioning that Nigeria would no longer tolerate importation of junks and poisons into Nigeria.
However, I saw Buhari’s admonition as mere expelling gas and trying to offshore the security business of safeguarding the health and waste of savings of Nigerians on junks to the culprit country exporting poison. It won’t work and the authorities overseas would just laugh us to scorn, as an unserious nation.
The bill prescribing life sentence in prison for importers of fake medicament remains marooned at the national Legislature for three years unattended. Whereas, India has for a long time imprisoned for life such culprits Nigeria gives option of paltry N15,000 fine for importing fake, toxic medicines that kill people every day. In China, it is death sentence for manufacturers and peddlers of fake drugs and regulatory officials protecting them.