Despite criticism from various quarters, the Central Bank of Nigeria will continue with its present foreign exchange policy. The apex bank also plans to expand the list of banned goods. Central Bank Governor, Godwin Emiefele stated this during the Monetary Policy Committee (MPC) meeting held last week.
The CBN in August 2015 banned 41 items from accessing foreign exchange in the Nigerian Foreign Exchange markets. Importers of such items were left with the option of sourcing forex from either the parallel market or bureau de change. The decision is seen by many as one of the reasons why forex scarcity has persisted for almost two years now and why the exchange rate disparity between the parallel and official market(s) continue to widen.
The Central Bank, in a statement released last week, insisted that its forex policy would set the nation on the right path of boosting local production, creating employment and growth. It also claimed that Intelligence reports at its disposal, reveal that certain individuals were funding the push for the bank to reverse its policy.
The Central Bank has come under increased criticism over its handling of the forex policy. There have protest organised requesting that the Central Bank Governor resign. Foreign portfolio investors, relied upon by Nigeria to boost forex liquidity remain skeptical to re-enter the capital market. FPI data for the first three-quarters of 2016 shows Nigeria attracted about $1.5 billion compared to about $5 billion same time in 2015.
Apart from banning 41 items, the CBN has also put in place forex restrictions on the outflow of forex by Nigerians. This is thought to have increased forex trade in the black market as most companies who would have otherwise repatriated the money into Nigeria will rather not pass through the official window but sell via the black market.
Despite Conflicting Reports, CBN Claims Forex Sale Under New Policy Is ‘Most Transparent’,
In a statement issued over the weekend by the Central Bank of Nigeria (CBN), the apex bank reiterated that the sale of forex under the new policy is ‘most transparent’ and without bias to any individual or company. This came even as media reports alleging irregularities in the rates at which forex was obtained by some individuals and companies from different banks under the new forex policy made the rounds.
According to the CBN, though, it had queried the affected banks and some of the financial institutions had returned a response indicating that some of the figures were related to formatting errors which did not affect the actual rates of the reported transactions.
The CBN was quick to remind the public that under the new forex policy, it neither allocates forex nor does it deal directly with banks’ customers. In addition, it stated that the CBN did not fix forex rates for transactions by individuals or companies, but expected that banks to forward to it, evidence of forex sale to end users and to advertise same in national dailies, in line with its principle of transparency.
“Since the introduction of the new FX Policy in 2016, we have published, monthly, the evidence of sale from deposit money banks (DMBs), as received from the banks and without any alteration by us in the spirit of transparency. We have recently observed, however, that some DMBs forwarded inaccurate data, which were erroneously published and gave a wrong impression of disparate rates;
“The DMBs involved in providing inaccurate data have since been issued queries accordingly. Some have returned a response indicating that some of the figures were related to formatting errors which do not affect the true rates of the affected transactions. As the constitutionally authorised industry regulator mandated to manage the foreign exchange market, maintain external reserves and to safeguard the international value of the legal tender currency, we wish to state unequivocally that the CBN has a duty to perform and would not indulge in acts capable of discrediting the foreign exchange market.
“We therefore wish to reiterate that the sale of foreign exchange under the new policy is most transparent and is not intended to benefit any individual or corporate body in anyway. While we appreciate the concerns of stakeholders, we urge all concerned to verify information on matters relating to the Bank and use our available channels to lodge their complaints.”
The Central Bank of Nigeria has been under frequent criticism from Nigerians unhappy with its handling of the forex policy. Apart from the banning of 41 items and the apparent controls put in place to deny easy access to forex, the apex bank has also been blamed for unscrupulous activities which it has been trying to deny since last week.
It issued a press release last week, chastising critics who it claims their real interests “are anything near altruistic but rather self-serving and unpatriotic”. In another press release on Monday it came out to clarify alleged “wrong FOREX purchase figures” which it was accused of publishing. The media had noticed discrepancies in its forex utilization reports suggesting that there could be some elements of foul play in their reports. However it denied it vehemently, explaining that it was due to errors in the submissions made by the banks.
In line with our principle of transparency, we directed DMBs to forward to us evidence of FOREX sale to end users and to advertise same in national dailies;
Since the introduction of the new FOREX Policy in 2016, we have published, monthly, the evidence of sale from DMBs, as received from the banks and without any alteration by us in the spirit of transparency. We have recently observed, however, that some DMBs forwarded inaccurate data, which were erroneously published and gave a wrong impression of disparate rates;
The DMBs involved in providing inaccurate data have since been issued queries accordingly. Some have returned a response indicating that some of the figures were related to formatting errors, which do not affect the true rates of the affected transactions
The interesting part of the press release however was the bank’s apparent denial of accusations that it was allocating forex to certain individuals or companies at prices not determined by the market. It denied as follows;
The Central Bank of Nigeria neither allocates foreign exchange nor does it deal directly with bank customers;
The CBN does not fix FOREX rates for transactions by individuals or companies;
Analysts believe the denials suggest the CBN takes the matter seriously considering the effect it could have on the integrity of the apex bank, which is critically required to sell Nigerian debts.
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