The Central Bank of Nigeria (CBN) has issued a stern warning to commercial banks found involved in the unlawful trading of foreign exchange. This action comes as the Nigerian naira recently plummeted to a staggering N950/$ in the parallel market, coupled with escalating concerns over the scarcity of foreign exchange.
Reports have emerged suggesting that some commercial banks are allegedly diverting foreign exchange to the unofficial forex market, instead of catering to their clientele.
Folashodun Shonubi, the acting governor of CBN, highlighted this crucial issue during a lecture titled, “Diaspora Remittances and Nigerian Economic Development,” held in Abuja. Shonubi underscored the need for decisive measures to curb illicit remittances and direct them through legitimate channels, thereby optimizing economic growth.
“We are committed to revealing the identities of commercial banks engaged in these unscrupulous practices,” Shonubi declared, indicating the central bank’s resolve to hold banks accountable for their actions.
Addressing the flaws within the current remittance framework, Shonubi estimated that the cost of transferring funds from diaspora to Sub-Saharan Africa amounts to approximately 9 percent of every $100. This exorbitant fee is recognized as the highest globally.
Nigeria has recently received $16.7 billion in remittances, but the majority of these funds are being directed outside the official foreign exchange market. Shonubi articulated the CBN’s efforts to incentivize individuals to bring their funds into the formal sector, minimizing reliance on informal, difficult-to-monitor channels.
Shonubi acknowledged the shortcomings of the Naira 4 Dollar scheme, an initiative that aimed to stimulate formal market transactions by providing a N5 refund for every dollar remitted. Despite the best intentions, the policy fell short of anticipated outcomes, leading to the discontinuation of the N5 rebate.
While recognizing the value of incentives in driving participation in the formal market, Shonubi stressed the need for comprehensive reforms to streamline the remittance process, reduce costs, and bolster the formal economy.
The recent volatility of the naira has heightened concerns among citizens and businesses, with the value of the currency continuing to erode. This situation has raised questions about the efficiency of Nigeria’s foreign exchange management and the sustainability of its economic stability.
In response to these challenges, the CBN’s declaration to clamp down on unscrupulous practices by commercial banks signals a firm commitment to address the forex crisis. With the spotlight on the banks’ activities, there is a renewed hope that transparency and accountability will guide future actions in the Nigerian financial sector.
As the nation grapples with these issues, the eyes of many remain fixed on the CBN’s forthcoming actions, in anticipation of measures that could potentially restore stability to the foreign exchange market and safeguard the country’s economic interests.