A former Deputy Governor of the Central Bank of Nigeria (CBN), Obadiah Mailafia has decried the apex bank’s decision to discontinue the sale of foreign exchange to Bureau De Change (BDCs) operators stating that the development may worsen naira value.
The CBN Governor, Godwin Emefiele had announced at the end of the CBN monetary policy committee meeting in Abuja on Tuesday, that BDC operators would no longer have access to FX supply from it.
He stated that BDC operators have become a channel for illegal financial flows in collaboration with corrupt individuals to carry out acts of money laundering in Nigeria.
“They have turned themselves away from their objectives,” he had said.
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“They are now agents that facilitate graft and corruption in the country.”
As a way of addressing the gap created by the decision, Emefiele stated that the CBN will henceforth serve the publics’ needs through commercial banks.
Reacting to the situation, in an interview granted ThePunch on Wednesday, Mailafia stated that more caution is required as the apex bank’s decision may push the value of the Naira further down.
He cautioned against scarcity of foreign exchange that may arise due to bureaucratic processes in the commercial banks.
“If we are not careful, that decision will actually worsen the naira value because the BDCs, you could walk into any of them anywhere and within five minutes, they will attend to you but the banks, you have to drive to your nearest bank, you have to queue most of the time,” he said.
“The CBN has not told us the rate, the banks will want to make a profit over the official rate, we don’t know whether they will make a decent profit or they will profiteer.
“Bankers were the biggest experts in round-tripping. Old habits, I don’t think they change. Leopards are very unlikely to change their spots.
“So, we may end up in a scenario where there is scarcity and the simple economics of demand and supply tells you that where there is increase scarcity, price is likely to shoot up.
“If bank bureaucracy makes it difficult for people to access dollar, what it means is that the bureaucracies, obstacles and bottlenecks are likely to put pressure on supply and pressure on supply may mean an increase in demand for the dollar and greater fall of the naira, if we don’t play the cards well.”
Mailafia expressed doubt in the credibility of Nigerian commercial banks handling the sales of forex.
He said the banks will prioritise their interests and only make available to the public whatever is left.
“How can you totally trust these commercial banks because most of them will want to corner the dollar for themselves and whatever is left, then they can now share with the market at a rate they want?” he queried.
“On the naira, it is not just the underlying economic fundamentals that matters like interest rate, inflation and so on, these things matter and the level of debt affect it but there are the non-quantifiable elements like violence, instability, rural banditry and terrorism, those things undermine the productive capacity of the economy.
“They also destroy social capital, the trust that holds the community together to do businesses together.”
