RECENT BAN ON FOREX HAWKERS
Foreign exchange otherwise known
as ‘forex’, can be described as the system for dealing in the currencies of
other countries, or the conversion of one country’s currency into that of
another.
Few days ago, it was widely on the news that
the Nigeria’s apex bank – the Central Bank of Nigeria (CBN) had ordered the
immediate closure of Bureaux De Change (BDCs) branches nationwide, stating that
branch operations were no longer allowed in the subsector; we reportedly learnt
that 90 days ultimatum was issued to the affected institution. This directive
was contained in the revised guidelines for BDCs as released by the apex bank.
In addition, the CBN categorically and unequivocally disclosed that henceforth hawking of foreign exchange on the streets and other open places, which is currently invariably not unusual in Lagos, Abuja and Port-Harcourt, that has ‘endured for over three decades surviving civilian and military administrations’, would no longer be accommodated or tolerated. It stated that from January 1, 2016, street trading of the dollar, among others would be non-permissible; disclosing that violation of such directive would attract a severe penalty.
The mother bank further roared that it shall be a ground for the revocation of licences if any street trader in foreign currencies is found to have any business relationship with a licensed BDC. Similarly, the guideline entitled ‘Revised operational guidelines for Bureaux De Change in Nigeria’, prescribed that for a BDC to be considered valid in 2016, it must meet the financial requirement of depositing a minimum of #71.45 million with the CBN.
It is worthy to note that since inception, the CBN has taken full
responsibility over nurturing the money and capital markets. In consequence to
this, the mother bank introduced treasury bills in 1960, treasury certificate
in 1968, and facilitated the establishment of Lagos Stock Exchange in 1961. It
also went further to institute the Capital Issue Committee now known and
addressed as the ‘Securities and Exchange Committee’ in the early 1970s.
The CBN undertakes Monetary Policies in order to maintain Nigeria’s external reserves to safeguard the international value of the legal currency; to promote and maintain the monetary stability and a sound cum efficient financial system in Nigeria; to act as banker and financial adviser to the federal government; and finally, to act as lender of last resort to commercial banks.
Since the establishment of the apex bank in1958, it would interest you to acknowledge that so far ab initio the governors (bosses) of the bank implemented their respective policies as regards the monetary system of the Nigeria’s financial industry. The 9th substantive boss of the bank in the person of Prof Charles Soludo introduced one of the most controversial policies in the history of the bank – the ‘Consolidation’, and it worked effectively. No doubt, it was an accomplishment that fetched the man in question a well-respected and renowned name as a financial guru. Subsequently, Mallam Lamido Sanusi (now the Emir of Kano) as the 10th substantive governor of the bank came up with his ‘Cashless policy’; a measure Nigeria at large will live to testify its goodness and reliability.
Furthermore, Mr Godwin Emefiele – the current boss of the bank, assumed duty as the 11th substantive governor of the apex bank amidst tough challenges. When he assumed duty, on Tuesday June 3, 2014 precisely, he wasn’t meant to be informed that all eyes were on him regarding reshaping and restoring the unstable and ‘drowsy’ Nigerian economy, which is undoubtedly spearheaded by the famous Central Bank of Nigeria (CBN).
Frankly, Emefiele’s appointment as the CBN boss came at a moment the
Nigeria’s financial industry was undergoing severe tension following the
uncertainties that trail the nation’s currency – the Naira. Presently, analysts
and financial experts are profoundly of the view that enormous, drastic, and
fearless effort is immensely required towards driving the country’s economy to
greater destinations.
When Emefiele came on board, during his media briefing he wholly disclosed his onward preparedness to uplift the Nigeria’s economy; thus he extensively stated most of the policies he intended to pursue vigorously, which included the determination of the apex bank to reduce ‘high interest rates’ found in commercial banks as well as ensuring ‘exchange rate stability’ with a view to reawakening and raising the value of the Naira.
Going by the tempo he is presently employing toward actualizing the
former – reduction of high interest rates, it’s apparent that soonest the
nation’s banking sector would not just be juicy but would be a place to reckon
with worldwide. For instance, six years after consistent increase in lending
rates, the Monetary Policy Committee (MPC) of the CBN on Tuesday November 24,
2015 resolved, among other issues, to reduce the benchmark interest rate
otherwise known as ‘Monetary Policy Rate (MPR)’ from thirteen percent (13%) to
eleven percent (11%). It also reduced the Cash Reserve Ratio (CRR) from
twenty-five percent (25%) to twenty percent (20%). This was in addition to its
determination to ensure that by 2016 as directed, there would be zero naira
Commission on Turnover (COT) currently experienced by current account holders
in Nigeria.
In the same vein, its (CBN’s) recent ban on
the incessant branches of the country’s Bureau De Change (BDC) as well as forex
hawkers is unarguably an obvious indication that the boss of the apex bank is
prepared to actualize the latter – exchange rate stability. Even a day old
child comprehends the fact that proliferation of illicit foreign exchange
markets/units across the federation remains one of the major banes, if not the
most, to the Nigeria’s exchange rate which of course contributes tremendously
in crippling the country’s economy. Suffice to say that it is high time they
are eradicated.
Indeed, it’s only a dogged and sincere
approach that would holistically make the Nigeria’s exchange rate stable on a
regular basis. Voicing out a certain policy is ostensibly extremely different
from its implementation; hence, the CBN governor, Mr Godwin Emefiele is
expected to take the bull by the horn toward ensuring that this worthwhile
proposed policy that would surely stand the test of time if duly implemented is
severely handled without much ado, with a view to writing his name in gold in
no distant time. For this to be thoroughly actualized, a reliable mobile
committee or agency that would monitor the day to day compliance of the
affected people/bodies is meant to be set up by the CBN.
Another disturbing act that is ravaging the nation’s currency (the Naira) is the ongoing sale of the Mint or new naira notes by unauthorized dealers in every nook and cranny of the country, and must also be drastically considered by the Mint Inspectorate unit of the CBN whose function is to maintain security and quality of naira notes and coins; unfortunately, the coins have faded out. The lingering constant circulation of torn naira notes by the commercial banks might not be unconnected to the aforesaid anomaly or illegal practice. The mints are being sold by the banks to unauthorized dealers thereby making them (the banks) issue torn naira notes that are meant to be burnt or discarded to their teeming clients via the counters or ATMs as the case may be.
Surely, the Naira is on a very hot seat, thus required to be rescued by a masquerade. So if the CBN is truly willing and determined to actualize a society or country that would be known for a stable exchange rate, it must be ready to wear a non-human face. Think about it!
Comr Fred Doc
Nwaozor
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