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The Central Bank of Nigeria (CBN) is set to raise the volume of its dollar supply to authorised banks to boost foreign exchange supply in the system, reiterating that only those involved in illicit transactions patronised black market operators and paid outrageous rates.
Senior central bank officials, who spoke with newsmen amid reports of Naira’s fall yesterday, explained that the growing illiquidity in the black market, where the US dollar traded N535 would continue as the apex bank sought to drive Nigerians to official sources, where the rate was about N411 to the dollar.
The officials insisted that the black market rate could not be a reference rate as it implemented a multi-pronged approach to stop the dollarisation of the economy for domestic transactions.
The apex bank, had recently met with government MDAs, ministries, agencies and department to stop collecting payment in foreign currencies, targeting particularly, airlines and the Nigerian Port Authority.
The officials also made clear that those, who collect rent in dollars would be prosecuted, reiterating that if anyone needed dollars for foreign transactions, they should simply go to their banks.
The CBN officials, who expressed optimism about that measures put in place so far to check speculators, said the the apex bank has the capacity to meet all legitimate transactions channeled through the banks and maintained that the black market represented less than one per cent of foreign exchange transactions and should never be used to determine the country’s dollar exchange rate.
“There is no reason for anyone, who needs dollars to go to the black market as long as the person needs dollars for legitimate purposes. Anyone patronising the black market to buy dollars at such rates must be engaged in illegal business, because he can get the same dollars from the banks, the CBN, investors and exporters’ window at much lesser rates.
“So, what is the reason they’re going to the black market? Let those going to black market illegally desist from doing so. Their banks will sell them dollars through any of the approved channels. If anyone is refused, he/she should come out openly to report the bank. We will deal with the bank,” the central bank officials explained in reaction to journalists.
The senior officials also said the central bank had banned all government agencies from carrying out transactions in dollars.
“For instance, agencies like the Nigeria Ports Authority and others that request some customers to pay dollars have been asked to stop such forthwith. Also, agencies such as the Federal Airport Authority of Nigeria (FAAN) or airline operators involved in charters and international airlines tickets must all be done in naira, as long as they are in Nigeria,” he explained.
According to the officials, “Traders, who go to the black market will lose their capital as their replacement cost can never be matched in the black market, because their import will always be too expensive so they had better look inward and begin local production. Manufacturers too should reduce their overdependence on imported raw materials in their production as we build an economy, where most raw materials would be sourced locally.”
In a related development, the CBN, yesterday, reassured Nigerians that its upcoming digital currency, commonly referred to as e-Naira, would not disrupt the existing structure of the banking system but would rather enhance financial stability.
The apex bank also anticipated that the introduction of the e-Naira would improve the flow of remittances into Nigeria as it would bring about cheaper means of international fund transfer.
Deputy Governor, Operations Directorate, CBN, Mr. Folashodun Adebisi Shonubi, said this at the Chartered Institute of Bankers’ of Nigeria (CIBN) Advocacy Dialogue Series Four, where stakeholders converged virtually to discuss, “Central Bank Digital Currencies (CBDC): Insights for the 21st Century Banker.”
Shonubi, who was represented by the Director, Payment Systems, CBN, Mr. Musa Jimoh,said, “This CDBC is a cheaper alternative to cash, as well as for electronic form of payment. It does have implications for both, however.
“The intention is not to eliminate the use of other forms of payment, but simply to introduce a complement to the current options, areas of payments options that we have in the country and all over the world.
“This will enable effective competition and the natural evolution of payment option, policies and all that, thereby ensuring the safety and stability of the payment system in the long run.
“In my opinion, we believe the CBDC will not disrupt the existing banking and payment landscape. No, banks and other fintechs will not be disrupted, rather, it will provide them with another platform to innovate around the new money with the opportunity to leverage the enabling infrastructure and platforms to develop value added services such as programmable smart contracts microcredits savings payments, etc.”