By Stephen Ubanna
When President Bola Ahmed Tinubu, a – one time governor of Lagos state, hastily removed the country’s age-long subsidy on Premium Motor Spirit, popular, petrol, which the past Administration of Muhammu Buhari had failed to do and moved a step further to unify the country’s official and Parallel, popular, Black market exchange rates, many had expected him to address the problems that may arise from such economic policies, particular, free floating of the naira to cushion the harsh effects on the populace but the reverse was the case.
With barely eight months in office as President and country’s President and Commander –In-Chief, C-In-C, of the Armed Forces of the Federal Republic of Nigeria, the inflation rate, going by reports released by the National Bureau of Statistics, NBS, under the close watch of a S Professional Statistician, Semiu Adeniran, which had hit 28.9% as at Dec. 31, 2023 remains high. In the months of January and February, 2024.
The inflation rate of the most populous West African country may have become worse going by the analysisof the NBS, Consumer Price Index, CPI, because the prices of good and services are measured on the exchange rate of the naira to the North American country of the United States, US, dollar, which was raised to N1,400.00 to US one dollar on Saturday, February 3, 2024, at the country’s Autonomous Foreign Exchange Market, AFEM.
There is no gain saying the fact that the Central Bank of Nigeria, CBN, which is currently under the Leadership of Olayemi Michael Cardoso, which had between June 24, 2023 and February 5, 2024, had adjusted the naira exchange to the US dollar, which is the major currency of foreign transactions several times is not tired of doing so.
Note that the CBN, first adjustment of the naira exchange rate to the US dollar in the country’s AFEM, was said to have been carried out on June 24, 2023, barely one month in office of Tinubu. The naira, according to a top Nigerian Customs Service, NCS, Officer, who spoke to The Value News online on condition of anonymity had confirmed that the apex Bank had adjusted the naira exchange rate to the US dollar from N422.00, used by the NCS, under then Customs Comptroller General , Hameed Ali, a retired Army Colonel, during the Administration of Former President Muhammadu Buhari, to N589.00 to US one dollar.
Much of the Forex sourced by the importers were said to have been used in making payments for Wheat, Maize, Aircraft, Beverages, spirits, vinegar, Motorcycles, Tokunbo vehicles, Pharmaceutical products, Automotive Gas Oil, popular diesel, Petrol, Dual Purpose Kerosene, DPK and Aviation fuel. This is in addition to Precious metals, electrical machinery, equipment, Computers and Organic Chemicals among others at the nation’s seaports and Land border Areas.
This may have informed why the NCS, under the close watch of Adewale Adeniyi, MFR, has used the current exchange rate of the naira to the US dollar in calculating duty payments on imported Consignments and clearance of such cargoes at the seaports and Land border areas. The fallout was the astronomical rise in the prices of goods and services in the country as Nigerians cry out for the government’s intervention to save the situation from degenerating that people may take to the streets in anger because of the hardship.
. In July, 2023, the Tinubu’s government, was said to have further raised the naira exchange rate to N770. 88.00 to one US dollar at the AFEM, thus putting pressure on the Local currency. Again in November, 2023, the government increaed the naira exchange rate to N951.941 to one US dollar with its backlash effect on the prices of both locally manufactured and imported goods including locally produced crops.
Cardoso, the CBN, governor, who has the ear of the Nigerian President may not have been satisfied that the gap between the naira exchange rate at AFEM and the Parallel market is still wide that he had sought Presidential approval to further adjust the naira to the US one dollar. He got it, leading to the adjustment of the naira to N1356,883.00 to the US dollar at AFEM on February 2, 2024.
The CBN Authorities who may have seen the Presidential nod as an opportunity to further thinker with the country’s exchange rate of the naira to the US dollar, which is apparently the major currency used in international transactions.
The message sent Nigerians by the CBN governor was clear that the government needs ‘’to generate adequate revenues to fund the country’s N27.5 trn, 2024 budget as borrowing cannot do it. Not surprising why the apex has repeatedly adjusted the country’s official exchange rate on the customs trading portal several times between June 24, 2023 and now, which many belie had worsened the woes of importers with their clearing agents.
Importers have every reason to worry about the volatile movement of the naira to the U dollar at the country’s official and Black market exchange rates of the naira to the US dollar and other world major currencies because as at 1978, during the Administration of Olusegun Obasanjo, as Army General, the exchange rate was N10.00, N220.00 to $13, and $100 respectively .
Until the latest adjustment of the official exchange rate from N1,356,883.00 to N1,413.62 in Customs trading portal, Manufacturers were said to have spent N2trn to import raw materials for their production needs and other locally produced products between January and September, 2023, meaning that the Companies will spend more forex to import these their raw materials needs and other foreign goods this time around.
It was not surprising why maritime analysts fear that the prices of bread , cement ,Computers and other locally produced goods including the imported products will continue to remain high this 2024, due ‘’to the Manufacturers’ efforts in seeking ‘’to offset operational costs , volatility in the country’s foreign exchange market and high inflation’’
The CBN Authorities may have read the handwriting on the wall that the current forex crisis in Nigeria may force some individuals and corporate Organizations to resort to making payments in transactions made for goods and services in the domestic economy in forex because of loss confidence on the Local currency that it has warned against such practice.
Ibrahim Mu’azu, the apex Bank Director of Communications who may have acted on the mandate of Cardoso, the apex Bank governor, was said to have drawn the attention of Nigerians and Corporate bodies to the provisions of the CBN Act,2007, which ‘’stipulates the use of Local currency as a legal tender in Nigeria and the consequences of its violation which includes six or nine months imprisonment’’.
Appealing to the foreigners who are encouraged to continue to use their Cards for payments, for goods and services to ensure to exchange their foreign currency at any of the country’s authorized dealers’ outposts, Mu’azu, the CBN, Director of Communications noted that failure to comply with the country’s Monetary policy would the foreigner or Corporation Organization into trouble.
The trading public and the consumers who are at the receiving end are watching to see how Cardoso, the CBN governor, and his Management team will stabilize the value of the naira to the US dollar to bring down the prices of goods and services in the country as the NCS, which are involved in implementing the government fiscal policies and collecting revenue for the government at the seaports, airports and Land border areas cannot do it.
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