By Lateef Adegbite And Suleiman Umaru
This is not the best of best of times for Money Deposit Banks, MDBs, operating in the country and individuals hoarding the North American country of the United States, US, dollar, described as the most traded foreign currency in the forex market and other foreign currencies ostensibly to weaken the naira at the country’s official and parallel foreign exchange markets.
This is because Wale Edun, minister of Finance and Coordinating of the Economy , who has been described by Babachair Lawal, a former Secretary to the Government of the Federation, SGF, under former President Muhammadu Buhari, had described as one of the best hands in the Present Bola Ahmed Tinubu’s Administration in Collaboration with Olayemi Michael Cardoso, CBN , governor and Taiwo Oyedele Chairman , Presidential Committee on Fiscal Policy and Tax reforms appears to have risen up to the challenge.
The strategies that were said to have been put up by the trio to firm up the naira at the official and parallel, popular black forex markets in the recent time may have informed why the Nigerian President could assure the business Community, within and outside the country that crucial plans are underway to improve the country’s Foreign exchange liquidity.
The Nigerian President has every reason to reassure the Business Community that there was no cause for alarm over the country’s forex liquidity as the government is expecting an influx of $10 billion into the market within the next couple of weeks to ease the country’s liquidity challenges in the country’s official and the Investment and Export , I&E window forex markets.
Determined to shore up the value of the local currency, the Lagos state born Nigerian President had on Thursday , November 2, 2023, signed two executive orders to provide support to the country’s foreign exchange market, which over the years has been grappling with persistent decline in value due to chronic shortages of the US dollar.
One of the executive orders sighted effectively allows, under forbearance, all the cash that is in the domestic economy to legally come into the formal money supply while the second one allows domestic issuance of foreign currency instruments so that the companies would have the incentive to provide the much-needed forex into the country from whatever source.
The minister of Finance and Coordinating minister of the economy may have hit the nail on the head when he disclosed that over the years , the Nigerian foreign exchange market has experienced a consistent decline , noting that decline exacerbated , thus resulting in over 50% naira depreciation after the CB, disclosed its plans last June to consolidate all forex exchange windows into the, I&E, widow with the unification of the official of the parallel market forex rates by the incumbent Nigerian President.
The minister may have sent a message to the key foreign exchange players in the economy when he disclosed recently that the government is going to digitalise the forex market to attract more forex that would serve as a buffer for the nation’s economy. Recall that the Cardoso led CBN, had previously issued forward contracts to various Nigerian businesses, promising them dollars at agreed upon prices in the future but could not achieve the desired purpose .
Note that theoreign exchange situation of the country became so worrisome as some of the blue chip companies like Guiness Nigeria plc and Nestle , were said to have incurred N49 billion and N123.7 billion in foreign exchange loss in in their 2023 half year operations. The foreign exchange loss by the blue chip companies may have informed why the Nigerian Stock Exchange Ltd, had last August, put forth a proposal to the government to permit US dollar -denominated bond listings on its platform to alleviate the forex challenges faced by companies operating in the most populous African country and largest economy.
The Securities and Exchange Commission , SEC, on its part was said to have blacklisted six online trading platforms in its latest crackdown on unregistered firms offering investment advices in the country as part of moves to stabilize the value of the naira at the forex markets. The blacklisted firms are Prime Invest and Primeinv.co, FXBoxed, New Finance LLC , New Fx Limited and Axi24. Others are Evove Consulting LCC and Trust Fund- Mining Global Prpert Limited.
The Nigerian President had at a recent annual Nigerian Economic Group, NESG, summit in Abuja, the Feral Capital Territory the Nigerian President was said to have asked the country’s foremost private sector think tank and policy advocacy group to bring its ideas, Leadership acumen, capital and collective will of their large conglomerates and business networks to help in rebuilding the country’s economy.
The appeal may have fallen on deaf ears as Niyi Yusuf, Chairman, NESG, had made it clear to the Nigerian President that ‘’the country is now at the precipice’’, pointing ‘’to potentially more risks of stagnation and stress if a slow-growth and low investment era persists’’.
The NESG Chairman was emphatic in his remarks which may have given members of the government Economic Management Team, a cause for concern, when he declared that the nation stands at a critical precipice ‘’, noting that the challenges demand immediate concerted efforts to solve’’.
Going by the measures that had had been put in place by the Tinubu’s government and implemented by the apex bank, may have encouraged Tope Fasua, Special Adviser to the President on economic matters to declare on Tuesday, November 7, 2023, at’’ the Cowries to Cash’’ lecture and Lunch at the FCT, that ‘’ the measures will help the naira achieve the N500.00-N600.00 to the US one dollar in the forex market in the future’’, urging those still hoarding the foreign currencies to further weaken the naira at the forex markets to stop or get ready for losses
Mike Adenuga, Chairman, Conoil and the founder of Globacom Communications limited, who had boasted an estimated net worth of $3.6 billion is no longer finding the situation funny with the continuous free fall of the naira in both the official and parallel markets. The multi-billionaire Conoil Chairman was said to have witnessed a $300 million decrease in his net worth of $3.6 billion , thus reducing his net worth now to $3.3 billion because of the persistent devaluation of the naira.
This may have forced Fasua, Tinubu’s Special Adviser on Economic matters to advice Nigerians hoarding the US dollar, European Union, EU, euro and United Kingdom pound sterling with the hope that the naira will continue to depreciate at the official and parallel forex markets to watch it, stating that ‘’the government’s policies will shock them’’.
Adewale-Smart Oyerinde, Director General, Nigeria Employers Consultative Association, NECA, MDBs, operating I the country would the Nigerian government to first fix the problem before setting the targets. The NECA, boss who could not hide his feelings had described the government’s plan to shore up the value of the naira at the official and parallel forex market as a bold initiative but said the problem on ground will require a deliberate and focused plan of action to address the shortfall in the country’s US. Dollar supply in various foreign exchange windows.
While the foursome of the President, Edun minister of Finance ,Cardoso, governor of CBN, and Oyedele, Chairman, Presidential Committee on Policy Matters and Tax Reforms are working round the clock to fix the naira, Jim Obazee, a former Chief Executive Officer, CEO, of the Financial Reporting Council of Nigeria and Special Investigator , appointed by the Nigeria President on July 28, 2023, , ‘’to look into the books of the CBN, and key government business entities’’ report appears to be causing some discomfort in the Presidency. George Akume, a former governor of Benue state and SGF, had said on Monday, November 6, 2023, that the report which is very damning would be made public soon to show how’’ bad governance had brought the country to the present predicament’’ .
He is right. The former CBN governor was said to have documented how the Bank was dolling out on a weekly basis $80 million to the banks for personal Travel allowances or payment of school fees. The former CBN, governor may have known that day of reckoning will come that he was said to have documented the Aides of the former Katsina state born Nigerian President and his Successor, Tinubu, who were also getting allocations illegally from the apex bank of up to $20,000 weekly which they were said to have diverted to their Bureaux de Change , BDCs for sale.
That weekly allocation of $20,000 to former President Buhari’s political Aides and a few top politicians in the Present Tinubu’s Administration and even Media houses as well, may have come under Obazee forensic audit and it’s not looking good for those who have not found it expedient to refund the naira equivalent to the bank.
Akume, the SGF, may have indicted the Buhari’s Administration when he said the report will enable Nigerians to know what really went wrong in the foreign market and the country got to the present mess. It was reported that Aliko Dangote, a multi-billionaire business mogul had collected $3.4 billion from the former Godwin Emefiele led CBN, governor, who had been in the Department of State Security custody for 151 days, before being granted bail by an Abuja High Court, but repaid $1.9 billion in the naira equivalent to the government coffers , leaving a balance of $1.5 billion.
Dangote, who is the President of Dangote Industries may have thought that he could easily penetrate the ranks of the Tinubu’s Administration as he has done with previous Administrations but got it wrong. He was said to have made efforts to see the Nigerian President on the debt issue but to no avail. The Nigerian President may have refused to him because of the outstanding unpaid $1.5 billion owed the government. He was said to have repeatedly said that the $1.9 billion, refinery with a capacity to process 650,000 barrels per day could not have been realised but for Emefiele, the immediate past CBN governor’s support.
The Nigerian multi-billionaire business mogul may have known that the Tinubu’s Administration is not likely to give him a soft landing over the $1.5 billion debt that he has put for sale his Bombardier Global Express XRS jet which he had bought for $45.5 million, some thirteen years ago. He was said to have also put for sale his multi-million-dollar luxury yacht as part of a strategic move aimed at his expensive portfolio luxury assets.
It was not surprising why the CBN, management of the country’s Forex market under Emefiele for the eight years of the Buhari’s Administration was in a mess and now have a spill over effect on the Tinubu’s Administration.
