Moved by the free fall of the naira against major international currencies, Senators, yesterday, grilled the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele in an executive session.
Speaking on the outcome of the meeting, which lasted for over an hour, spokesman of the Senate, Senator AbdullahiSabi, said Emefiele’s appearance before lawmakers was in tandem with the provisions of the constitution.
“We received the CBN governor today and he briefed us on the state of the economy and activities of the bank. What he did today is in line with the provisions of the constitution. He touched on global economic conditions,” he said.
“He told us that we are not immune from the external shocks of the world. He drew instances from international occurrences and their effects on the Nigerian economy. He also gave us insights into the various policy actions the bank has taken over the month.
“Based on his analysis, it is clear that the Nigerian economy is not doing bad. We asked the CBN governor questions on the suspension of BDCs from accessing foreign exchange. The Senate acknowledged the pains Nigerians are facing,” he added.
Sabi said contrary to an earlier position taken by the Senate, that the CBN needed to relax its foreign policy regime, he said it was clear that their actions were in the best interest of the country.
Sabi said: “But having listened to the CBN governor, we fully support him. The actions are meant to strengthen local production and build resilience in the Nigerian economy. We believe that we will come off it.
“The demand for forex in Nigeria is guided by artificial demands. We will come up policies to enable the CBN determine requests that are genuine. Let me say that the policy of the government is yielding some fruits. It has stabilized the economy. Meanwhile, the CBN governor also told the senate that the bank will not go back on the restrictions placed on Bureaux de Change (BDCs) as he described them as waging a relentless war on the Naira as they embark on rent seeking speculation of the local currency.
He also told the senators that some 2,837 BDC operators were leading the speculations against the Naira in the parallel market, adding that since stoppage of allocations to BDCs, they have been sourcing their dollars from oil companies and other foreign exchange earners.
The session with the senators was a closed-door affair, but those who had knowledge of what was discussed at the meeting told Vanguard that Emefiele said that, “we will not review the restriction on the BDCs, because we have seen that they are the ones waging a huge war against the Naira.”
According to him, the Senators and Nigerians should not worry about the falling value of the Naira currently, adding that the currency would soon stabilize.
“By our records, 45 per cent of our foreign exchange earnings go into importation of food, fuel and fertiliser. With the coming on board of Dangote factories, we are sure that 45 percent will stay with us. That is why we are backing him to complete the projects in record time,” he added.
The CBN Governor disclosed that Dangote Group was already a company quoted internationally and that its activities were more than one man business.
He reminded the Senators that Dangote Group was already building a refinery in Lagos, a tomato paste factory and a fertiliser firm, stating that once the companies come on board next year, the nation would be able to save 45 per cent of its foreign exchange on imports.
It will be recalled that the CBN had accused BDCs of buying foreign exchange from the apex bank at N197 and selling at N270. Operators of some of the BDCs were also said to be in an unholy alliance with politicians to defraud the nation of its foreign exchange. At the height of the racket, Bureaux de Change operators were said to be simply collecting the passports of several individuals and using them as evidence of customers who purchased forex from them in making returns to CBN. But with the introduction of the Bank Verification Number, BVN, a good number could no longer do so.
The actions of these operators, CBN sources said were defeating the purpose of government, which is unwilling to devalue the Naira. The strong value of the local currency intended by government in the interest of the economy and its citizens was not benefitting Nigerians. Operators of Bureaux de Change simply used their privileged positions and access to powers-that-be to rip off Nigerians.
If in the past there were sincere and genuine operators of BDC, the arbitrage opportunity between the official rate and the parallel market rate attracted many persons into the BDC business. According to CBN figures before the apex bank started selling foreign exchange to BDCs, there were only 74 operators in 2005. In the 10 years since CBN started foreign exchange sales to BDCs, the number has grown to 2,837 with 150 applications for licenses every month. CBN records showed that it used to allocate $8.6 billion to BDCs per annum.
Emefiele also assured Senators that the Nigerian economy would bounce back in the next two years. He said though the 2,700 Bureau de Change operators appear to be waging war against the Naira, the bank’s decision to remove them from official funding list of forex will save the national currency.