Naira Continues To Plunge With The Lack Of Control On Foreign Exchange

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While Nigerian citizens suffer the crunch of the foreign-exchange crisis and the deepening plunge in the value of the naira, the Central Bank of Nigeria (CBN) has given no hope of redemption. Since the new administration took over, a series of policies has been introduced to control foreign exchange. Termed an anti-money-laundering effort, CBN banned deposits of foreign currency into domiciliary accounts on August 5, 2015. In a CBN press release,

Olakanmi Gbadamosi, the Director of the Trade and Exchange Department at the bank, said the ban on cash deposits in foreign currency will curb “illicit financial flows in the Nigerian banking system, which aligns with the anti-money-laundering stance of the Federal Government.”

By the book, as proclaimed by the CBN, account holders who wish to access their funds can withdraw foreign currency or its naira equivalent. However, in practice, several banks honor only the latter option, paying equivalent naira to customers who wish to withdraw their deposited foreign currency. Banks simply tell their customers who wish to be paid foreign currency that the foreign currency is unavailable. It is unclear whether this is a conspiracy with the CBN to further curb the flow of foreign currency. Still more puzzling, neither the CBN nor the banks have tried to clarify this confusion with depositors, who were bulldozed into this policy overnight, without prior notice.

The CBN also advised in its press release that individuals may “source foreign currency for eligible and legitimate purposes such as BTA, PTA medical, mortgage, school fees, goods…” but the difficulty in accessing funds for these so-called “legitimate purposes” has rendered many law-abiding citizens helpless,with nowhere to turn.

Earlier last year, in April 2015, the CBN made its first major step in enforcing stricter controls on the use of foreign exchange bylowering the spending limit on automated teller machines (ATMs) in naira from $150,000 to $50,000 per annum. The CBN directed banks to adhere to the policy and monitor their customers or face sanctions, imposing in addition a limit of $300 on daily cash withdrawals with ATM cards, which representsan 88% reduction from the previous daily cash-withdrawal limit of $2,500.

In anothereven more recent move to further control foreign currency, the CBN has ordered that,beginning January 1, 2016, bank customers with ATM cards will no longer be able to use their naira cards for international transactions. This means that Nigerian citizens doing small businesses, on vacation, tourist visit, in school, can no longer make use of their cards for payment.

As the financial policies of the new administration unfold, time will tell whether they are actually helping or hurting the economy. So far, common,law-abiding citizens are being battered bitterly by these restrictions in foreign exchange, while the big “moneylaunderers,” whom the policies are intended to punish, continue to siphon off the nation’s resources in the savviest ways they know best.

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