By Henry Boyo
IN a recent ‘chat’ with members of the Newspaper Proprietors Association, the CBN Governor, Godwin Emefiele, spoke extensively on efforts to resolve the current challenges to best practice monetary and fiscal management; particularly salient in his narrative, was the alarming revelation that “in 11 years CBN allocated $66bn to BDCs!!” In retrospect, Emefiele ruefully noted that “if this didn’t happen, we could comfortably have over $90bn in our reserve account today and we will not be struggling to pay our bills… and perhaps certainly, we would not be where we are today.” The CBN Governor therefore confirmed that he had stopped direct funding of BDCs since Jan 2016 and also observed that CBN was the “only Central Bank in the world that was selling forex cash to BDCs”. However, I recall that, in a press briefing on liberalisation of the forex market in March 2006, incumbent CBN Governor, Prof. Charles Soludo reported that Wholesale Dutch Auction System (WDAS) replaced the Retail Dutch Auction System (RDAS) in February 2006 “to make forex management more efficient and effective”. Soludo also confirmed that after one month of operating WDAS “it is evident that although greater efficiency of the forex market and convergence of interbank and official exchange rate, have been achieved; nonetheless, “the increasing divergence between the interbank/official and parallel market rates has become a key problem.” Soludo, however, blamed this development on the exit of those marginal banks which hitherto roundtripped and increased forex supply to the parallel market before the banking sector consolidation; thereafter, forex supply to the parallel market was drastically reduced as banks which successfully consolidated generally complied with existing forex regulations. Secondly, according to Soludo, demand pressure in the parallel market continued to rise because of the long list of banned imports which were hitherto invariably funded through the parallel market. Additionally, the several restrictions and requirements for ‘cumbersome’ documentation have also constrained those forex users from using the formal market. Nonetheless, Soludo decried “the current situation with “more than 10 percent premium in the parallel market rates compared to the official rates as simply unacceptable.” Consequently, CBN resolved “to eliminate many of the restrictions imposed on users of the official market, so that hitherto ineligible transactions will now be accommodated in the official market, by ensuring forex supply to all markets to reduce demand pressure in the parallel market”. In plain language, Soludo threw our scarce dollar revenue at BDCs despite his earlier admission that the activities of the major patrons of BDCs i.e. money launderers, smugglers and treasury looters were inimical to the Nigeria economy. My observations on the adoption of such disenabling policy were captured in April 2006, in an article titled “CBN Stop This Nonsense”. A summary and excerpt from that article follows hereafter. Please read on: “The Apex bank has since released further details of its ‘easy dollar’ project and a closer evaluation of the raison d’etre and the framework adopted reveals serious contradictions of the promise of improved mass social welfare and national economic independence. It is of major concern that the inspiration for the new ‘easy dollar’ regime came from our ‘friendly’ foreign creditors ‘the Paris Club & Co’. According to Dr. Mailafia, CBN Deputy Governor, the Club demanded the implementation of an ‘easy dollar regime’ as precondition for their widely condemned spurious “debt relief” which allegedly ‘robbed’ Nigeria of over $12bn at a go. Furthermore, we recall that Nigeria’s economy suffered most whenever so-called IMF and foreign experts become strategically stationed in the heart of our Finance Ministry and Central Bank. In retrospect, SAP implementation, for example, which was touted as the magic wand for our ailing economy, conversely, regrettably, ran the Nation’s economy aground. Ultimately, Nigeria with minimal debt in the mid 1980s, thereafter became a chronic debtor and our resources were frittered away with marginal benefits to Nigerians. It appears it is once again déjà vu. The modern slogans are NEEDS and a 13-point bank reform; regrettably, Nigerians are once again caught napping, while their national wealth will be quietly siphoned away via voodoo economic policies! The implications of some of the measures adopted to make forex easily available should worry well-meaning Nigerians; for example, according to new CBN guidelines, the erstwhile requirement for foreign borrowing by our banks on lending for local to be “tied to projects that are capable of conserving forex through local production have been waived”! Thus, banks can now borrow from abroad and lend directly to ‘errant’ importers and distributors who add little or no value to the economy. Furthermore, those ‘special’ Nigerians with huge Naira surplus can acquire dollars officially to buy stocks and shares in stock exchanges abroad. The new guidelines also allow anyone with overseas property, foreign guarantees or even a savings account from an offshore bank to use such collateral to obtain loans from Nigerian banks is an arrangement which may subsequently undermine the Nigerian banking system, as this will encourage movement of speculative hot money into Nigeria in search of high returns from Nigeria’s lucrative government sponsored bonds and treasury bills which offer up to 17% returns as opposed to the extremely conservative returns of about 3% in serious and focused economies abroad. What is clear from the IMF/Paris Club-induced CBN guidelines is that our monetary authorities have once more positioned the resources of our nation for capital flight and the renewed accumulation of spurious foreign debts; debts which will once more balloon unnoticed for some time until our ‘benevolent’ overseas creditors decide once more to demand another round of economic restructuring with another set of IMF schooled monetary wizards, both indigenous and foreign planted once more at the heart of our treasury! As an example of such profligacy, in a fruitless attempt to bridge the widening gap of almost N20/$1 between the official and black market rates of exchange, the CBN will now supply each registered Bureau de Change (BDC) (with the sum of $200,000 twice weekly for onward sales to off-the-street customers who do not have to show need or supporting documentation to access official forex. There is no evidence that this level of freedom exists in the forex market anywhere in the world; some observers say that these are good days for both the small and the elite groups of money launders and smugglers of contraband. With such ‘easy dollar’ party in place, our emaciated local manufacturers may soon be singing Nunc Dimitis and it really may be truly over for them, unless good Nigerians everywhere wake up from their slumber and tell the CBN that enough is enough” SAVE THE NAIRA, SAVE NIGERIANS.