The Central Bank of Nigeria (CBN) must go beyond just stopping the sale of foreign exchange to bureau de change operators and discontinue the issuance of licenses to fresh operators if it is to succeed in sanitizing the currency market, a development economist and President, Pan African Development Corporation, Odilim Enwegbara, has said.
This is coming just as the CBN’s decision to wield the big stick against the BDCs continues to jolt the market and impact the Naira.
On Thursday, Naira’s value plunged deeper, as depreciation pushed Naira to shed its value on the parallel market against the dollar, with the currency attracting N525 exchange rate to the dollar.
The exchange rate moved from N504 at the close of the market on Monday, a day prior to the CBN’s decision banning the weekly allocation of $5000 to each of the over 5,500 BDC operators in the country.
On Tuesday, the CBN clamped down on BDC operators in the country for their role in destabilizing the foreign currency market and worsening the value of the Naira against the dollar and other international currencies.
At the end of the Monetary Policy Committee (MPC) meeting in Abuja, the CBN governor, Godwin Emefiele said the clampdown on the BDCs would also see a significant portion of the weekly allocations of FOREX to them being transferred to commercial banks to continue to meet the legitimate demands by Nigerians and their businesses.
But, Enwegbara who hailed the CBN’s decision against the BDCs, urged the apex bank to go further to demand the National Assembly to make a law limiting FOREX trading operating licenses to only licensed deposit money banks.
“What the CBN governor has done against the BDCs is what a Central Bank governor that is fearless should do. Those who are running BDCs are top government officials from the office of the President to the National Assembly, Ministers, governors and other top government officials.
“BDCs are where these people make their millions through money laundering. FOREX trading through the black market is where they bastardize the Naira and blame it on market forces. No market forces will determine the value of the Naira.
“To restore the value of the Naira, sanitize and stabilize the currency market, the CBN must go further and get the National Assembly to make it a law that unless one is a registered commercial bank with branches and offices across the country, one cannot trade in FOREX. Again, for one to be trading in FOREX, one must be doing what is called virtual reserve banking,” Enwegbara said.
The development economist, who lamented the deplorable state of the Naira against other world currencies, said the truth was that the country has been plunged into a huge mess by the activities of the FOREX traders.
He said since the CBN was close to where the problem was, to see how bad the situation was, what it was trying to do was to wield the big stick and save its face.
“They (CBN) are the ones who have been giving FOREX to BDCs weekly to engage in round-tripping,” he said.
In announcing the clampdown, Emefiele said Nigeria remained the only country where her central bank was still selling FOREX to BDC operators.
He said the Bank was compelled to continue with the practice following requests and pressures from those who had reasons to demand FOREX to pursue legitimate businesses, like payment of hospital bills, school fees, and travel expenses
Expressing disappointment over the abuse of the gesture, Emefiele said the apex bank was concerned that the BDC operators turned themselves into agents that facilitated graft and corruption in the country through money laundering.
On the proposed take-off of the Nigerian digital currency, the e-Naira in October this year, Enwegbara it was a matter of time before paper currency goes out of fashion in the world.
At the moment, he said people have been conducting multi-million Naira transactions involving transfers and receipt of money through the existing electronic systems.
“At the end of the day, how many Nigerians are able to see and touch the Naira. A lot of Nigerians transact business through digital transfers. A time will come when people would not even recognize how the Naira looks like, just like the current situation with one kobo and other coins. “The world does not need a lot of currencies to carry on their business.
Digital money will help curb money laundering, illicit financial flows, and fake currencies because people would no longer have the opportunity to move large bundles of physical cash.
Even those who want to pay bribes would have to do so through transfers. When they realize that such transfers would go through the banking system that would have trails that could be followed and investigated by the anti-graft agencies, they would think twice before going into it,” he said.