By Elizabeth Chukwuma
When president Muhammadu Buhari assembled the some of the best brains in the country in his new Economic Advisory Council, EAC, to replace the old Economic Management Team Headed by Yemi Osin bajo, many people were optimistic that the Council members would deliver on their mandate.
They have every reason to think so because the members, have a direct access to the Katsina state born Nigerian President and are expected to advise him on economic policy matters including fiscal policy matters,particular, Forex Management, including Fiscal policy analysis, economic growth and a range of domestic and global economic issues.
More so, they had expected the Council members l to take advantage of the monthly Technical and scheduled quarterly meetings which ought to be held with the President to push forward their demands for better economic policies for the country.
Doyin Salami , a Professor and Chairman of the Council and his Council members which include Chukwuma Soludo, a Professor and former Central Bank of Nigeria, CBN , governor, may not have lived up to expectation as the naira had continued to witness a free fall in both the official and Parallel markets in the recent time.
Indeed, instead of using their privileged position to provide a breather to Godwin Emefiele, the, CBN, governor, to effectively manage the Foreign Exchange market, Forex, to sustain the relative stability in market over the last four years it had slipped off the bank’s hand as Speculators take over.
Many believe that their refusal to put down their feet down to advise the President on serious economic matters, and who in turn should give a matching order to the CBN, governor and his Management Team to act may have given the Speculators and other foreign exchange dealers, the ammunition to hijack the market and dictate the rate of the naira against other major Currencies in the world based on the high demand.
The situation in the Foreign Exchange Market has become so bad with the outbreak of the Asian country of China Coravirus , described as pandemic and the drop in the price of Crude Oil, the country’s major source of Foreign exchange earnings , in the International Oil market .At present, it had nosed dived from the 2020 budget benchmark of $57 per barrel to between $31 and $33.
.Financial analysts believe that the drop in the country’s Forex earnings from Crude Oil sales in the International Oil market in the last two and half months have distorted the government funding of Forex market , thus making the dollar and other major Foreign Currencies unavailable in the Forex market for the banks and the Bureau DeÇhange Operators, popular, BDC.
Note that over the last one week, the exchange rate of the naira to the dollar at the BDC, which had stayed quite stable at around N360 ,00 to a dollar since mid 2017, had reached an all time high of N430.00, fueling speculations that it might hit N400.00 before the end of the second quarter of this 2020 fiscal year. This may have forced the CBN to adopt a panic Forex policy measure checkmate what is happening in the market in by devaluing the naira to benefit from the free fall of the naira in order to raise more money for the government to fund the over N10.30 trillion 2020 budget estimate.
As a prelude to helping the government to generate more local Cureency from the sales of the dollar to the banks and the BDC, at the Forex market, Emefiele , who appears to be under intense pressure was said to have introduced a new lexicon in the management of the Forex market to justify the action that had been taken by the bank over the devaluation of the naira. Instead of coming out clearly to tell Nigerians that the naira had been devalued , to N380.00 from N360.00 to a dollar, he described it as an Adjustment in Value.
Analys believe that the Delta state born CBN governor had seen the continuous devaluation of the naira over the last four years as a way to win the heart of the Katsina state born Nigerian President in order raise more local Currency for him to run the government , service the country’s domestic and foreign debts including provision of basic infrastructural facilities in the country.
Financial analyst believe that Emiefele, the CBN, governor may have exposed himself to the public about the recent 50% devaluation of the naira to the US dollar, when he issued a Circular to all the banks and the BDC on Friday, March 20, 2020, on the amount that the dollar would be sold to them at the Forex market.
He had said that the BDC, would be buying the dollar from the apex bank at N380.00 to but should not sell it to the end users above the amount to ensure that it is available in the market . He may have shot himself on the leg when he said that the BDC, Operators who have the capacity to sell more than the N380.00 to a dollar, are free to so. But the Deposit banks, he said . would source their Forex from the apex at N376.00 to the dollar but sell at N377.00 to a US dollar to the end user.
In justifying the recent devaluation in the value of the naira against the US dollar at the Forex market, he had said that ‘’it is the responsibility of the bank to adjust the naira’’ , which is the country’s local Currency when the need arises. He noted that the bank has ‘’no hand in what happens in the Investors, Exporters and End Users window’’.
According to him, the Investors and Exporters who are the dominant windows in the Forex Market, dictate the exchange rate in the market, insisting that’’ the apex bank has no hand in it’’. Bank sources told The Value News, that the CBN governor was merely acting out a script from the Presidency in the management of the country’s Foreign currency generation from crude oil sales in the International oil market to raise money for the government .
The fear in both official and unofficial circles was that the CBN governor had provided a soft landing dealersdealers , particular, the banks to make the US dollar scarce in the Forex market, by resorting to hoarding to force the demand to outstrip supply in order to push up the rate or direct the Customers to the BDC, in which the bank has a strong link.
Given an insider information about the recent Adjustment in the value of the naira in the Forex market, the CBN governor may want public to believe that the fraudulent activities of Speculators borne out of the fact that the CBN was at the verge of devaluing the naira triggered panic buying of the dollar in the market which created the artificial scarcity of the dollar in order to ’’serve their dubious and selfish ends of jerking up the exchange rate, thus weakening the naira’’.
Perhaps to bring the Forex Management situation of the country under control, an aggrieved Emifiele may have gladdened the heart of Nigerians when he said the bank has commenced investigations with the Nigerian Financial Intelligence Unit, NFIU, and other related agencies like the Economic and Financial Crimes Commission, EFCC, to unravel the dubious Speculators and the other dubious Forex dealers.
Isac Okoroafor, a Deputy Director and the bank Spokesperson explained that there was no reason for the recent Adjustment in the value of the naira to the US dollar because the apex bank had maintained relative stability in all segments and management of the country’s Forex market over the last four years.
In spite of the fact that the CBN, governor had used his knowledge and understanding of the Forex Market and the economy to convince Nigerians that the recent drop in the naira was not a devaluation but an Adjustment, not many Nigerians took him serious because of the fear that it would trigger off Inflation in the economy. They cited the Border closure across the country with the neighbouring countries of Benin Republic, Niger and the Central African country of Cameroon which had made the case worse.
But Kingsley Moghalu, a former CBN Deputy governor in-charge of System Stability would not think so. The former CBN top official believes that’’ there was nothing wrong with the recent devaluation of the local currency insisting that it was long over –due to push up the economy to a manageable level’’
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