The Central Bank of Nigeria (CBN) has said it would not float the naira despite calls by some people and organizations for the apex bank to float the currency.
Addressing journalists in Washington, on Friday, Mr Isaac Okorafor, Ag. Director of Communications of CBN, said, “Our economy has its own peculiarities, and we cannot kill our people in the name of floating the naira.”
According to him, this clarification became imperative following calls in Washington that the naira should be floated.
His words, “Our market is extensively liberalized and the call to float the naira is a bit laughable.”
He added, “Yesterday (Thursday), when Madame Lagarde was discussing the economy of Egypt, she lamented the devastating inflation that is in that country. Egypt has half of our population, Egypt receives about $12 billion in foreign earnings and several billions in tourism. We are 180 million people, our infrastructure is so poor and the productive capacity cannot be fast enough to rise to benefit from massive depreciation.”
Stressing that the apex bank was not averse to floating the currency but was only worried about the likely crippling effects on the economy and the people, Okorafor said, “If we float the naira and we allow speculators and those with corruption money and all the people who created the bubbles to launch into the market, you can imagine the kind of situation we will find ourselves.”
“Yes, we will go the whole hog to practise economic theory the way they say you should allow your currency to float. Of course, you should also know that no country floats its currency just leaving it to the dictates of the market. Our economy has its own peculiarities, and we cannot kill our people in the name of floating the naira.”
The CBN had in June 2016 announced an automatic adjustment mechanism of the exchange rate with the re-introduction of a flexible inter-bank exchange rate market “to facilitate a liquid and transparent Foreign Exchange Market.”
Meanwhile, the CBN has also vowed to deal with Deposit Money Banks that frustrate Small and Medium Enterprises (SMEs) in their bid to get foreign exchange for their businesses within the stipulated time.
Okorafor said there had been a deluge of complaints by SME operators that banks were not forthcoming with releasing forex to them to do their businesses.
The CBN spokesperson said, “It has become necessary that we bring to your notice the complaints from customers, especially those who operate in the SMEs segment of the market that banks are frustrating their efforts at getting forex.
“You would recall that recently we introduced a window to be able to give forex to SMEs, which incidentally are the engine of growth in our economy, for them to be able to obtain a small amount of forex that suits their business and we have received complaints now that banks are frustrating them.
“We have reviewed all these complaints and found out that they do not have evidence and so we want to use this opportunity to appeal to customers of banks and the SMEs to please give us concrete evidence against these banks so that we can hold them responsible by way of sanctions.
“Get a photocopy of your Form Q, Form X, Form A or Form M. Give us the name of the bank, branch and send to us and we will deal with them as example to others.”
Speaking on the sanctions that would be meted to erring banks, Okorafor said these would be in accordance with the CBN Act as well as the Banks and Other Financial Institutions Act.
He, however, added that the sanction would depend on the type of infraction committed, saying that the “disciplinary measure could affect the staff on duty and can go as far as the chief executive officer.”
The CBN recently provided a FOREX supply window of $20,000 quarterly at the prevailing interbank rate to the SMEs in realization of the important role they play as the engine of growth to the economy as well as providing employment to the teeming unemployed youths.