Business
Economic Expert Faults CBN’s New Forex Policy
An economic expert, Mr Atiku Samuel, says the recent measure by the CBN with respect to foreign exchange (Forex) management is not enough to bridge the gap between official and parallel market.
Samuel, who is also the Head of Research at BudgiT Nigeria, said the overall policy framework guiding foreign exchange system was still unclear, as such would continue to pose a problem for the sector.
He said that the source of the foreign currency, which the CBN was using to liquidate the banks, was still from crude oil earnings, meaning that the country was still relying on a single commodity for Forex.
The CBN issued new policy actions on Forex aimed at easing access to foreign exchange for personal, business and travels as well as educational and medical fees.
The CBN later provided 370.9 million dollars to 23 banks to meet the visible and invisible requests of customers.
As part of its new policy action, the CBN also directed all banks in the country to open Forex retail outlets at major airports as soon as logistics permitted them to do such.
“First problem is that we now have a lot of Naira in circulation and fewer dollars to meet demand.
“In terms of supply, the truth is that the biggest supplier of foreign currencies is not the CBN, but remittances from abroad which is largely classified as autonomous sources.
“The reality still remains that most remittances from Diaspora is done through informal channels because you make more when you sell at the black market. So round tripping remains an issue.
“So when you look at if from that perspective, you see how the black market continues to get funded,” he said.
Samuel said the government should come out with a policy that would make most transactions with foreign currencies electronic, therefore eliminating the need for foreign cash.
He said that just as the policy stated that for schools fees and medical the account of the school or hospital will be credited, so also travelers cheque or dollar card should be issued to customers traveling abroad for whatever purpose.
He said this would help mop up foreign currencies in the informal sector and bring it back into the official market.
Samuel said there should be a tight monetary policy framework guiding the growth of money at the CBN.
“If you look at how money is growing in Nigeria, it goes straight to the CBN. But how are they expanding this money?
“If you look at Federal Government finances for 2015, the total investment of the CBN in Federal Government securities is about N700 billion. But as I speak to you now, it’s getting close to N4 trillion.
“This means the CBN has been creating money and handing it over to the fiscal authorities to pay salaries and other things.
“Also banks, most of them are interested in just creating loans, lending it out to importers to buy dollars which put enough pressures again on the Naira,” he said.
“Payment of tuition fees for undergraduate/postgraduate studies shall be subject to a maximum limit of $25,000.00 per semester,” the Manual states.
The expansion of international card limits also reflects growing confidence among lenders that foreign exchange liquidity has improved enough to support retail dollar transactions.
Speaking recently at the BusinessDay 14th Annual CEO Forum in Lagos, CBN Olayemi Cardoso, governor of the CBN said buying and selling activities now increasingly determine outcomes in the foreign exchange market, unlike in the past when market participants relied heavily on routine Central Bank interventions.
According to Cardoso, Nigeria’s net foreign exchange reserves have risen from just over $3 billion at the start of the reform programme to more than $40 billion, while gross reserves have climbed to about $52 billion, providing stronger confidence for investors and enabling the Central Bank to reserve interventions for periods of market stress rather than day-to-day liquidity management.
The restoration and expansion of international naira card spending limits are increasingly being seen as one of the clearest signs that the benefits of the CBN’s foreign exchange reforms are beginning to reach households, students and businesses making legitimate cross-border payments.
The Secretary-General and Chief Executive Officer, WEC, Dr Angela Wilkinson, disclosed this in a statement, last Thursday.
“Nigeria’s participation comes at a pivotal time as the country seeks to expand energy access, strengthen energy security, accelerate gas development and mobilise the capital required for industrialisation and sustainable economic growth.
“WEC Nigeria will convene leaders from across the energy ecosystem, apply the WEC’s globally recognised Energy Trilemma framework to Nigeria’s unique context, and promote evidence-based dialogue, practical collaboration and informed policymaking.
“It will also ensure that Nigerian and broader African perspectives contribute meaningfully to global energy conversations,” she said.
Wilkinson expressed confidence that Nigeria would play a significant leadership role at the World Energy Congress scheduled for Riyadh in April 2027 and beyond.
The statement also quoted the Chairman of WEC Nigeria, Isa, as describing the country’s participation as an opportunity to deepen national and African leadership within the global energy community through practical solutions tailored to regional development priorities.
He said the platform would promote collaboration across sectors and attract sustainable investments into Nigeria’s energy sector.
The Chief Executive Officer of WEC Nigeria, Wunti, was quoted in the statement as saying that the council would connect leadership, evidence and investment to build a secure, affordable and sustainable energy system.
“This system will be capable of driving economic growth and shared prosperity.”
According to him, the platform will also connect Nigerian institutions and businesses with international knowledge, technology, partnerships and investment opportunities through the World Energy Council’s global network.
Recall that WEC, founded in 1923, is the world’s oldest independent and impartial community of energy leaders and practitioners, advancing informed, collaborative and practical action across the global energy system.