THE virtual meeting that the governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, had with investors last week where he pleaded with them to stop patronising black market operators for dollar purchases leaves much to be desired. Mr Emefiele had, at the meeting, stated: “We have seen your accounts already but we are appealing to you to stop and do what is right and what is legal so that Nigeria can be a better place to live in. Don’t go into illegal business. Do your business legally and make your money. I repeat and I know it. I know some of you are involved. Stop now. By you going to the parallel market, you are helping to overheat the market.”
We find it extremely difficult to come to terms with the appeal by the apex bank chief to these investors against the backdrop of an earlier warning doled out by the same CBN to currency speculators and those engaged in illegal use of foreign exchange in the country because of the damage their activities were foisting on the economy. If the CBN governor indeed knew those who were involved in what is patently an economic sabotage, what is the need for appealing to them? If there is a law against what the people are doing, why should the CBN governor practically beg people to halt their involvement in it? What is the point of having a law that cannot be enforced, if indeed the law is unenforceable? Rather than beg, the CBN governor ought to have wielded the big stick against the offenders to serve as deterrent to others. The impression created by the CBN governor’s appeal is that the CBN is probably a toothless bulldog. Does the country have in the CBN a regulator that is too weak to enforce its own laws? Failure to enforce laws serves as a fillip to others to flout the laws because infractions increase when sanctions are in short supply.
But that is on the one hand. On the other hand, why would anybody approach a black market operator that sells at a higher price if the same commodity is readily available at the official price? That investors are willing to buy the dollar at a price far higher than the official rate is a pointer to the dysfunctional economic system in operation in the country. If the gap between the official and unofficial rates of the dollar is too wide, the system has already created a room for corruption and the CBN would be at its wits’ end to curb abuses of the process.
We acknowledge the success recorded by the CBN in bridging the gap between official and unofficial rates of foreign currencies until recently when, as a consequence of the Covid-19 pandemic, the prices of crude oil crashed globally. For over two years, the strategy deployed by the apex bank to sway people from the black market was effective. But what has been revealed by the recent development is that the country’s economy is at the mercy of global oil prices. So, what has happened to all that the government claims to have been doing about diversifying the economy? The government needs to up its game and manage the economy better to shield it from external shocks.
We call on the CBN governor and his team to rethink their monetary policies with a view to putting an end to arbitrage in the foreign exchange market and come up with policies that would emplace an effective and efficient system which would, in turn, ensure that the foreign exchange market operates to the advantage of Nigerians with legitimate demands. That done, those who go outside of it would be visited with appropriate penalties. The apex bank also needs to accept the fact that the country’s currency is not at its strongest form yet and must be ready to set for the naira an exchange rate that is as close as possible to its real market value. The country cannot continue to pretend that its currency is strong when it is not. If it continues on that route, not only would it be destroying the economy, it would also be making life extremely difficult for average Nigerians as every glitch in the global market would destroy the buffer they have built for themselves.
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