The Central Bank of Nigeria (CBN) has said because of the ease of accessing foreign exchange (forex) in Nigeria, foreign businessmen particularly Ghanaian businessmen who access forex from Bureau De Chnages (BDCs) abuse the system.
Speaking at the 20th Seminar for Finance Correspondents and Business Editors on the impact of crude oil prices on external reserves and exchange rate management in Nigeria yesterday in Calabar, Cross River State, its Director, Monetary Policy, Mr. Moses Tule said the CBN has discovered that “Ghanaian businessmen come to Nigeria to source for forex because they believe it is easy to get it in Nigeria. As much as $1 million can be demanded by these foreign businessmen from BDCs.”
He warned that the “private sector must not be predatory in their activities and should be patriotic for the economy to grow.”
Tule noted that Nigeria is the only country in the world that funds BDCs and advised that since “achieving its objectives, the CBN should have withdrawn from funding the BDCs” and left them to source for their forex as other countries around the world do.
Tule cautioned: “If we do not control our consumption pattern, we will not have a naira, because you cannot plan on the volatility of the price of crude oil alone. We need to change our structure of production to avoid a further forex crisis, and we need to be very careful how we share money from Excess Crude Account (ECA).”
The CBN director also expressed concern that as the country approaches the end of the year, there has not been any implementation of capital projects across the country noting that “when a government does not execute capital projects, there is no future for the country. Execution of capital projects such as hospitals, roads and bridges help to reflate the economy with the jobs they create and the opportunities they provide.”
Tule also said for the first time, the CBN contributed N2 billion for the rebasing of the economy last year. This amount he said is different from what the Federal Government and other agencies contributed to the exercise.
In spite of these contributions, he said the economy is living on the illusion of being strong as some sectors considered informal were not captured in the rebasing exercise yet the country brags of being the largest economy in Africa.
When asked to comment on what was responsible for the growth of the external reserve since the advent of the Buhari administration, Tule said: “The increased is because of Buhari’s directive, and the fact that he stood his ground, that all revenue collecting agencies must remit all revenue into the Federation Account with the CBN and close all other accounts. We cannot build reserves in a culture of impunity.”
In his presentation, the Chief Executive Office, Financial Derivatives , Mr. Bismarck Rewane said Nigeria’s external reserve and foreign exchange rate crisis is tied to both resource and management problems as “resources are dwindling and management of these is not improving.”
He said N2 trillion was spent on subsidy over time till 2012 for the importation of between 12 and 15 million litres of petroleum products, which did not make sense.
The naira he said is “technically undervalued” and one way to address this crisis is to “get rid of subsidy.”
The country he said “must align spending with earnings and the right people should be put in place to execute this. If subsidies are not removed, it will make the adjustment more painful.”
The CBN he said has to be independent and autonomous, and if faced with difficult situations that goes against the grains of sound monetary policy, the best thing for the CBN governor to do if his advise is not accepted is to quit, because the policy environment has to be consistent.
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