For over five weeks now the Nigerian foreign exchange system has been on drama sketch. It is unbelievable that at a time of harsh economic circumstances manifesting in the form of sharp decline in foreign exchange earnings from oil revenue, soaring inflation and interest rates, a slump in gross domestic products (GDP), rising unemployment, mounting salary arrears amongst many economic woes, the banking industry is complaining of excess dollar cash up to US$5 billion (approximately N1 trillion) either stuck in some people’s hands or lying idle in bank vaults as a result of a foreign exchange directive.
The Central Bank of Nigeria (CBN) had directed that the banks should stop accepting dollar cash deposits as the apex bank itself also stopped accepting same from banks. Vanguard investigations revealed that the policy was informed by CBN’s findings that the economy has been awash with alleged illicit dollars which were probably being laundered through the banking system.
The apex bank, in a statement, had noted with concern a recent report by the Global Financial Integrity Group, which ranked Nigeria as one of the top ten countries for illicit financial flows in the world. The report, though unconfirmed, estimated that about US$15.7 billion of illicit funds go through Nigeria’s financial system annually.
Whilst we understand the concern of the apex bank especially in the light of the negative image, we wish to draw the economy managers’ attention to the other picture of the policy and call attention to the need for a more productive policy option.
This idle foreign currency asset is more than the annual incomes of six African countries put together and more than the recurrent expenditures of about 14 states of Nigeria put together. It is enough to provide employment for over four million graduates if invested into the economy. Most pathetic is that going by United Nations’ assessment of the poverty level in Nigeria, this amount is enough to feed over 20 million households in the low income bracket for one year.
We challenge the economy managers to come up with better, more creative options to bring the funds into economic activities in the face of the cash crunch being suffered by the larger economy and the citizens.
We advocate that the monetary authorities apply the several protocols on illicit fund flows, money laundering and terrorism financing while ensuring that legitimate foreign exchange deposits are allowed with proper documentations.
Also the illegitimate foreign currency assets should be pursued and recovered while offenders should be prosecuted.
The valuable forex should not be abandoned in the hands of a few individuals who might eventually compromise the system while the assets end up in their private accounts outside the country.