CBN’s Emefiele Should Stop Hoarding Dollars to Expand the Official-Parallel Rate Differential
Perry Isa Brimah
CBN governor Godwin Emefiele must be checked for his extremely harmful practice of hoarding Forex. The Apex bank governor has single handedly collapsed the Nigerian economy by his misadventures which cripple businesses, cause increased inflation, destroy the investment potential of Nigeria and fuel corruption.
Friends in banks report limited dollars released by the governor every week. There is no economic justification for this behavior Emefiele has continued to engage in. Increasing foreign reserves as sometimes suggested is not a reason for hoarding dollars and crippling the economy. Nor is the global oil sale price. We can easily compare to the years of Obasanjo’s rule. During that period, the average oil sale price was the same as the price currently (about $70 averaged out), but the Naira exchanged at under 150/USD for the period with negligible difference between the official and parallel market exchange rate. There was freedom to wire any sum of money abroad and the Nigerian economy grew.
forex-jumps-1-736×405.png
During Goodluck Jonathan’s years while Emir Sanusi Lamido Sanusi was at the helm, the naira lost a little strength as there was a global recession, but exchanged at an average of 150/USD at the official rate with less than N10 differential at the parallel market through out. Nigeria remained strong through the challenging recession.
Enter Emefiele, Enter Wide Gaps
As soon as the Zenith bank MD Godwin Emefiele replaced Emir Sanusi in early 2014, gaps started to expand! Emefiele started hoarding dollars to cause artificial scarcity and hikes in the parallel market dollar rate. While mismanaging the nation’s banking sector with many other crippling policies that fined the average man on all banking transactions and paid these steals to bank owners, under Emefiele the Naira quickly lost value at the official market and his intentional hoarding led to expanded differentials at the parallel market.
By the time Buhari took over, the Naira exchanged at 163 at the official market and 225 to the dollar at the parallel market. The cabal who surrounded Emefiele and continued to have access to official rate dollars started to make massive earnings and grow their businesses solely based on the advantage Emefiele had created for them. Forex traders, many with alleged links to the powers that be, also started to make killings by selling or helping people buy items with official rate dollars.
Reuters at the time wrote a piece captioned “Africa’s richest man got a fistful of dollars in Nigerian currency squeeze.” See: https://www.reuters.com/article/us-nigeria-forex-dangote-insight-idUSKCN0Z90G5
“Reuters examined foreign currency transactions made during an 11-week period in March to May this year. Over that time, Dangote businesses were able to buy at least $161 million in hard currency from the central bank. That was around nine percent of all the hard currency the bank sold over the period. In a single week in March, one dollar in every eight went to Dangote companies.”
They continued,
“Compared with buying dollars on the more expensive unofficial market, though, Dangote companies benefited to the tune of about $100 million.”
Thanks to Emefiele, the already super wealthy Dangote made a whopping $100 million from the official advantage in just 11 weeks. Extrapolate that for the whole 7 years Emefiele has been in office and the central bank governor has practically dashed just Dangote several billion dollars!
Reuters in the 2016 article continued,
“Small businesses complained that the foreign exchange restrictions were forcing them out of business. Frank Jacobs, president of the Manufacturers’ Association of Nigeria, said that the majority of manufacturers – 2,000 of them – had been unable to source raw materials because they could not obtain dollars to pay for imports. Up to 100 firms either shut completely or cut production, he said. ‘The large companies have better clout.’”
That is the summary of what Emefiele has been doing as head of the Apex bank. He continues to give the cabal dollars at rates even less than the official rate while killing small businesses’, by limiting access to dollars and even the right to wire money out of the country. It is not rate-announcing websites like abokifx that set Forex rates as the embattled Emefiele tried to portray. Only an economic illiterate will believe that. The Central bank governor must have thought that by false-flagging and hounding one media company, he can change the perception in Aso rock on how he has made the Naira of less value than tissue paper, not the masses.
Emefiele is crushing small businesses which employ over 70% of labor in Nigeria and drive the economy, out of existence. He does not only reduce access to dollars, expand the official-parallel differential but has also limited external wiring of money to $5,000 per month for corporate accounts! This is insane and illegal. With all these parallel imposed crippling policies, what has been the benefit to the country? Nothing other than rising inflation, contracting economy and loss of foreign investors while wealth is being transferred into the hands of the already super rich.
Osinbajo Gave Nigeria a Brief Period of Relief
We recollect that the first time Emefiele happily destroyed the Naira and the parallel market rate shot up to over 500/USD, at the beginning of Buhari’s tenure when the currency was in free fall; while the governor attempted to misinform the public that it was out of his control, the minute Buhari took ill and went to the UK on medical leave, Osinbajo took over managing the economy and with weekly announcements of adequate injections of Forex into the banking sector, the Vice president was able to maintain the Naira to dollar parallel market rate at N360 for almost a year in spite of the same economic conditions. The official-parallel differential was also cut down drastically while Osinbajo took control.
But today with Osinbajo locked away, and Buhari seemingly more concerned about his health and Sunday Igboho, Emefiele is once again in free reign and has gone wild, hoarding dollars to create the wide margin that gives the lazy cabal billions in easy earnings and kills all small businesses. Dollar as at today exchanges at N411 at the official market and an unbelievable N572 at the parallel market! See: https://emefx.com/ Businesses are dead!
Emefiele’s behavior was predictable, being a banker put at the helm. Bankers serve the interest of their colleague bank owners and not the masses. How long will Nigeria continue to be destroyed under Buhari and what appears to be the country’s life Apex bank governor?
Dr. Perry Isa Brimah M.D., M.S. Twitter: @DrPerryBrimah, Email: drbrimah@ENDS.ng