Following the Naira Crash , CBN has Made Moves to Correct Naira Depreciation – See Details.
The Central Bank of Nigeria (CBN) has issued a stern warning of punitive measures against commercial banks found to be involved in unlawful foreign exchange transactions.
This action follows closely on the heels of the depreciation of the naira, which has now surpassed N950/$1 in the parallel market due to the worsening scarcity of foreign exchange. There are allegations that deposit money banks are diverting a significant portion of their foreign exchange reserves to the unofficial foreign exchange market instead of serving their customers.
Acting CBN Governor, Folashodun Shonubi, revealed this during a lecture titled “Diaspora Remittances and Nigerian Economic Development” held in Abuja. Shonubi stressed the critical need for stringent measures to curb illicit remittances, redirecting them through legitimate channels to maximize economic growth.
Addressing the issue, Shonubi announced the establishment of a commission to conduct unannounced visits to banks suspected of engaging in unauthorized dollar sales. He stated,
“We are committed to publicly identifying and condemning the commercial banks involved in such unscrupulous practices.”
The acting governor also highlighted the deficiencies in the current remittance system, estimating that the cost of transferring funds from the diaspora to Sub-Saharan Africa stands at around 8–9% of every $100, making it one of the highest rates globally.
Nonetheless, he acknowledged that Nigeria has received approximately $16.7 billion in remittances, with the majority of these funds flowing outside the official foreign exchange market. Shonubi stated,
“We are making concerted efforts to encourage individuals to utilize formal channels for remittances, moving away from reliance on informal avenues, which have become increasingly challenging to regulate.”
Regarding the Naira 4 Dollar scheme aimed at encouraging formal market transactions, Shonubi acknowledged its limitations. The N5 refund policy associated with the scheme has proven ineffective, leading to its discontinuation. Despite this, he recognized the value of incentives in drawing people towards the formal market. He said,
“We will rebrand the foreign exchange market, currently known as the I&E market, to the Nigerian Foreign Exchange Market, as it remains the sole market recognized by us.”
Ayodele Adeleke, Commandant of the National Institute of Security Studies, underscored the significance of the lecture series in enhancing the nation’s awareness of security challenges. He emphasized that the series was an integral part of the 10-month course’s approach to fostering awareness and focus on the program’s goals.
In a related context, Shonubi attributed the devaluation of the naira against the dollar and the difficulties in managing the foreign exchange market to the diversion of diaspora remittances towards unofficial platforms like the parallel market. He clarified that a substantial amount of diaspora remittances arrived in Nigeria as dollars but were not officially documented, leading them to be funneled into the parallel market.
He further highlighted that the unregulated nature of the unofficial or parallel market facilitates criminal activities due to its lack of oversight.