The Naira as commonly known has been plagued with perpetual falling with minimal rising making it almost the lowest valued currency in Africa.
This trend has continued over the years despite efforts by Central Bank of Nigeria (CBN) in salvaging the fortunes of the country’s legal tender.
Recently, at the Monetary Policy Committee (MPC) meeting, Governor Godwin Emefiele stopped the sale of foreign exchange (FX) to Bureau De Change (BDC) operators in the country. This was also with the immediate halting of registration of new players.
This development did not come as a surprise to many industry observers as many saw this decision as one of those efforts put in by the CBN without visible results on the endangered naira.
Experts have however argued that more objectivity should trail the decisions on the naira with a long lasting effect.
Several permutations have been drawn up since Emefiele made the pronouncement but reports say the BDCs were becoming worrisome to the apex bank.
They set up to receive a supply of FX on a weekly basis from the CBN for onward sale to retail users people who needed $5,000 dollars or less.
Emefiele frowned at the activities of these money changers, saying they had become wholesale dealers and illegally traded FX to the tune of millions of dollars in singular transactions.
He added that the CBN receives about 5,000 fresh applications monthly for BDC registration as players continued to make huge profits while Nigerians suffered from the “dollarisation” of the Nigerian economy.
Furthermore, the apex bank chief accused BDC operators of money laundering, speculations, rent-seeking among other malpractices.
“They have turned themselves away from their objectives. They are now agents that facilitate graft and corruption in the country. We cannot continue with the bad practices that are happening at the BDC market.” Emefiele lamented.
He noted that the CBN will henceforth channel weekly allocations of dollar sales to commercial banks to meet legitimate FX demands. The banks will be monitored to provide forex for the legitimate use of Nigerians.
“We will deal ruthlessly with Nigerian banks that deal with illegal BDCs and we will report foreign organisations patronising them,” Emefiele said, adding that they are mandated to sell forex to every customer.
While the dust on the decisions of the apex bank had yet to settle, the social media community has gone haywire with many saying misfortunes will trail the forex Industry as job losses will follow.
Abdullahi Yawuri is a forex operator at Ogba in Lagos. He said the federal government should be mindful of the long-term impacts on lives who depend on them for survival.
“I am from Yawuri in Kebbi State and have been doing this business for over twelve years. I was pained when I heard of the news.
“It is a common thing to see good and bad eggs together in a basket. It spells doom for dependants who rely on income from our operators especially for some of us who have old ones who feed from our pockets.”
Reports say at the moment, there are over 3000 Bureau De Change operators, who have also developed sub-chains of workers operating as agents.
Human Resources experts have frowned at the decision of the CBN, saying that efforts by the government to salvage the country from post Covid-19 hardship may be jeopardized further with the ban.
The mjority views said the CBN should place more regulatory and monitoring orders on the BDCs rather than outright ban.
They argued that commercial banks should adjust to the CBN directive as the ban is likely to put more pressure on the Nigerian naira in the parallel/black market.
This status quo observers say has affected the disbursement of US dollars to foreign customers.
Although the situation should improve with the CBN channelling its weekly allocation to lenders, doubts exist over their capacity to replace BDCs in serving the huge demand for forex in Nigeria’s import-dependent economy.
“Getting dollars could become even more difficult than what we have now,” Opara said, noting that the move is likely to push more companies and business owners actively in need of dollars to the black market, further adding pressure on the naira.
A recent data from abokiFX.com disclosed that with the CBN’s announcement, the local unit dropped by ₦1.00 or 0.20% to close at ₦505 per $1 on Tuesday as against ₦504 on Monday.
Over the long term, the Central Bank’s effectiveness in disbursing foreign currency to retail users through the banks if the new system is sustained will dictate how the exchange rate at the parallel market will vary from the official rate of ₦410/$1.
For freelancers, remote workers, and remittance recipients that get foreign currencies through banks, the increased quantity of FX in the hands of lenders bodes well for their demands, except for the high fees banks charge on remittances.
Many are expectant of a positive bounce back of the country’s endangered naira even as the Central Bank takes random decisions towards its recovery.
This is needful even as the country strives for a quick recovery from the hardship of the Covid-19 era on global economy.