The Central Bank of Nigeria (CBN) has made a significant effort to boost the naira and encourage stability in the foreign exchange market through the payment of outstanding matured FX forwards owed to various creditors, but experts believe the effort could be truncated by the commercial banks.
The injection of the dollar could cause huge reflection in the economy but the immediate Vice President of the Manufacturers Association of Nigeria, Lagos Zone, Mr John Aluya, said the gains could be erode by the action of the commercial banks who may ensure the funds do not get to the end users.
He said he is yet to be informed of any of their members whose backlogs have been clearednoting that if the initiative is properly implemented, it will help to improve the system. But he said that commercial banks may likely frustrate the move by the apex bank.
“But if this move is well implemented, it could be an initiative that could be done in such a way that it will be an improvement in the system. But I will tell you that for every step the CBN takes the big elephants in the house are always there to truncate it and if the CBN is not careful the big elephants will also truncate this move that they are about to make. The big elephants I mean are the commercial banks. They are the people who have always made our exchange rate unreliable because they benefit from it. When you talk of the I&E window you bid for it but manufacturers do not enjoy the window, because the banks will tell you that you will bid for I&E at CBN rate, and they will give you another account to pay the difference into and that is truncating the system.”
The Chairman of the Nigerian Economic Summit Group, Mr. Niyi Yusuf, said, “This is in the news and it’s useful that the administration is delivering on its public commitments which should help to improve public confidence. It’s a good signal and a right step to rebuilding trust and confidence,” he concluded.
The Chairman of the Nigerian Association of Small and Medium Enterprises, South-West region Chairman, Solomon Aderoju, queried if the payments would get to the end users.
He said, “Will it get to the end users? How much have they cleared? If it will get to the importers and the end users, then, it’s a good development. If not, then, it’s still the same story. Nigeria’s problem is multidimensional. Even with the 43 items that they removed, are the importers now getting the forex from the banks? I am sure they are still using the black market.
“Over the years, we have been using the foreign reserve. The reserve has been depleting over the years because we are not adding anything to export. It’s the only export that can add to the reserve. So, it’s a deficit account.”
The former Chief Economist of Zenith Bank, Marcel Okeke, said, “The exact amount is not known. Where did they get the money? What are the terms of the borrowing? How much have they cleared? The secrecy around the management of foreign exchange by the CBN is now a concern. You no longer know the rate at the official window exchange. If they say they are now clearing, how? The international communities are watching, they are worried, and nobody is impressed. The government has not done anything to improve government supply. Even investors are not coming. Aside from these issues, there are other myriads of problems. The business climate is not encouraging. Are investors coming because we have the best infrastructure, are they coming because we have security? What exactly? “
