Nigeria has the worst foreign exchange instability in the world. And the CBN is to be blamed for the kind of foreign exchange crisis we are having. The Naira is losing its competitiveness simply because of the inability of CBN to protect it. Today the Nigerian worker with the gains of dollar, is losing 60 percent of his earnings to inflation.
By its crude monetary policies, CBN has unwittingly created five exchange rates for the dollar in the economy.
1- CBN sells dollar at certain rate to importers of raw materials and machineries. Those people don’t import anything. They sell the dollar and make quick profit. By that, they set one exchange rate of their own.
2- CBN sells dollar to banks for their transactions to customers. The banks collect the dollars, ignore the customers and sell to the highest bidder. By that they created another exchange.
3- CBN sells dollar to primary dealers, who are supposed to sell to Bureau de Change. The primary dealers don’t sell to BDCs. They sell to whoever they wish at inflated rate thereby creating their own exchange rate.
4- The BDCs, from the little dollars they could get from primary dealers, are supposed to sell to individuals of not more than $10,000 per person. They however sell to corrupt politicians eager to convert their stolen Naira to dollars and make quick money. That also is another exchange rate of its own.
5- Then the open market, the mallams that are not recognized by CBN who sourced their dollar from anywhere and sell at the highest rate to anyone. They also make part of the crisis killing the naira.
About five exchange rates exist for the dollar against the Naira in a single economy. Tell me how the Naira will ever be stable and regain strength.
Meanwhile where are all the dollars going? Not to import critical equipments or raw materials of course.
The bitter truth is that the dollars are not going anywhere but being stashed in domiciliary accounts of individuals and companies. There are about $40bn deposits in Nigerian domiciliary accounts.
The law establishing domiciliary account in Nigeria is done with intention to aid corruption and destroy Nigerian economy. According to chapter 34, paragraph 17, section 1 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995, individuals are allowed to open domiciliary accounts, to buy forex and are not required by law to disclose their sources.
Buhari should look at the law and repeal it. He should also make CBN to reverse its monetary policy with regards to foreign exchange.
Nigerian economy is dying not only because of low price of oil but because of disastrous foreign exchange imposed on the economy by incompetent people.
By Aliyu Nuhu
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