Aminu Gwadabe, the president of the Association of Bureau De Change Operators of Nigeria, claims that the Central Bank of Nigeria’s unconventional foreign exchange policy has negatively impacted the naira’s stability across all markets and created a significant premium between official and parallel market rates.
In a statement, Gwadabe stated that a massive rate disparity of N300/$ currently existed in the markets, with the official market rate at N430/$ and the parallel market rate at N730/$.
He said that it was an unconventional practice that lacked credibility and transparency to sell foreign exchange earnings at a fixed rate of N430 per dollar while the open market rate was N730.
“That singular act encourages rent seeking, currency substitution that continues to hurt real sector operators and the overall economy,” he said.
He noted that the open market rate was approximately N501/$ when the apex bank decided to halt supplies of foreign exchange to Bureau De Change in July 2021.
He claimed that more than a year later, the value of the naira against the dollar had drastically declined as a result of many Nigerians failing to fulfill their desires for invisible transactions and the regulator failing to demonstrate a strong commitment to doing so.
According to Gwadabe, the CBN continues to implement its exchange rate policies primarily through the small retail exchange institutions, or BDCs. As a result, the regulator and the general public must continuously support BDCs’ contributions to exchange rate stability.
This, he continued, could be accomplished by increasing the automation of their procedures and offering more channels for transactions in order to maintain a stable pricing equilibrium and do away with speculation, rent seeking, and currency substitution.
“I am very confident that Nigeria will in the not too distant future appreciate a stable exchange rate and availability of forex in the local economy,” he said. “As long as the right people get such responsibility for the implementation of government policies.”
He claimed that the CBN Governor, Godwin Emefiele, had attempted to enact numerous policies that went beyond the traditional money supply and were out of step with market reality.
Gwadabe praised the Naira-4-Dollar program, which offers a N5 bonus for every $1 in remittances from Nigeria’s diaspora as well as an N65 rebate for every dollar in non-oil export revenues and other incentives.
