Oluyinka Onigbinde
Importers and relevant stakeholders in the nation’s maritime industry have knocked the Central Bank of Nigeria (CBN) over the recent announcement of plans to stop the sale of foreign exchange(forex) to commercial banks in the country.
Shipping Position Daily recalls that the CBN had recently announced that it would stop the sale of foreign exchange to banks by the end of the year. CBN Governor, Godwin Emefiele, had stated that the banks must begin to source their forex from export proceeds.
He had said: “The era is coming to an end when, because your customers need 100million dollars in foreign exchange or 200 million dollars, you now want to pack all the dollars and pass it to CBN to give you dollars. It is coming to an end before or by the end of this year. We will tell them don’t come to the Central Bank for foreign exchange again and go and generate your export proceeds.
“When those export proceeds come, we will fund them at 5% for you and they will earn a rebate. Then you can sell those proceeds to your customers that want 100 million dollars. But to say you will continue to come to the Central Bank to give you dollars, we will stop it,” he stated.
However, importers and other stakeholders have argued that the planned stoppage of foreign exchange to commercial banks will have an adverse effect, this is even they urged the CBN Governor not to take the action that could jeopardize the nation’s economy
In a chat with our correspondent, the Chief Executive Officer Centre for the Promotion of Private Enterprise (CPPE) Dr. Muda Yussuf informed that the shocks of a stoppage of forex sales to banks will be difficult for the economy to bear. He said there would be profound macroeconomic shocks exchange rate shocks, inflation shocks, among others, adding that the economy and businesses would suffer dislocations and disruptions of immense proportions.
He said the only scenario under which the CBN can discontinue its interventions in the forex market with minimum disruptions is to allow all inflows, including that of the NNPC to feed directly into the “investors and exporters window at a market reflective rate”.
He said the CBN currently warehouses a huge chunk of the foreign exchange inflows into the economy adding that if the CBN decides to stop funding the commercial banks, it will be very disruptive for the apex bank to terminate its forex interventions and still hold on to the inflows.
According to him, “the shocks of a stoppage of forex sales to banks will be difficult for the economy to bear. There would be profound macroeconomic shocks, exchange rate shocks, inflation shocks and many more. The economy and businesses would suffer dislocations and disruptions of immense proportions.
“The reality is that the CBN currently warehouses a huge chunk of the foreign exchange inflows into the economy. It will therefore be very disruptive for the apex bank to terminate its forex interventions and still hold on to the inflows.
“The only scenario under which the CBN can discontinue its interventions in the forex market with minimum disruptions is to allow all inflows, including that of the NNPC to feed directly into the investors and exporters window at a market reflective rate.
Speaking also, the President Shippers Association of Lagos (SAL) Rev. Jonathan Nicol stated that the announcement of the plan stoppage of forex to commercial banks has led to panic buying of foreign exchange. He also informed that the policy could cripple the economy, stating that both imports and exports will be greatly affected by the decision.
According to him, the policy will lead to devaluation of the country’s currency and imbalance in the economy.
He said: “With this new directive, it means we will have to source our fund outside the bank; which will lead to panic buying because I don’t think the bank will have money now to service imports, so it means we have to buy the foreign exchange at our neighbouring country, like Benin Republic, Ghana or Togo, and that will lead to a whole lot of movement of funds outside Nigeria and that will affect imports because that’s a very gentle way of killing importation, which will affect the economy
“If there is no import, it will affect export, because the receiving country will also stop buying from you because there must be a trade balance and if there is no trade balance, it means your export will be rejected. So, these are some of the implications, what CBN is doing is a market devaluation of our naira” he said.
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Similarly, Olujide Akingbile; an importer and member of the Nigeria Importer Exporter Coalition group also said the policy is inimical to the growth of the economy. He said many of the importers still pay to Nigerian Ports Authority, (NPA) with dollars and as such it will be difficult for the government agency to be paid in foreign exchange.
“It is also important to state that some payments to the Nigerian Ports Authority, (NPA) by people using vessels and payment to NIMASA are denominated in foreign currency, today, you have to pay NPA in dollars. It means those bringing PMS and others will have to source for dollars and now where do you get the dollars because if you go to the banks now, you will not get these dollars. So the government will either legislate so that all such payments are now done in the local currency to avoid these demands that will go to the parallel market and shoot the exchange rate higher”, he cautioned.
On his part, Mr Segun Oduntan a freight forwarder and former chairman of the Association of Nigerian Licensed Agents (ANLCA) Tin Can chapter said genuine importers do not need to worry about forex he said the CBN policy is driven towards separating genuine importers from fake importers
“Genuine importers don’t have a problem with FX, I think what CBN is trying to do is to block one loophole or the other, but the problem is, as they are blocking one loophole another one is opening again. So it is only about we Nigerians until we are upright and do what is right, it will be difficult, I think they are just trying to separate the wheat from the shaft, we can’t generalize it that importers will be affected” he said.
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