The Nigerian naira fell to 305 to a dollar yesterday as pressure on the currency continues. The new low is the continued reaction of the market to a policy shift by the Central Bank of Nigeria (CBN) which stopped foreign exchange sale to Bureaux De Change (BDCs).
With the CBN living in denial over the true value of the naira and resisting calls for devaluation despite the huge gap between the official rates and parallel market rates, the BDCs have been the only way to know the true value of the naira, as the CBN continued multiple measures to defend the currency. But while the CBN’s move may be a sincere way of continuing what it thinks is best for the country, commercial banks have been ripping off Nigerians, using the same exchange rates which BDCs have been criticized over.
In justifying the move by the CBN, Governor Godwin Emefiele said: “Despite the fact that Nigeria is the only country in the world where the central bank sells dollars directly to BDCs, operators in this segment have not reciprocated the bank’s gesture to help maintain stability in the market. Whereas the bank has continued to sell Dollars at about N197 per dollar to these operators, they have in turned become greedy in their sales to ordinary Nigerians, with selling rates as high as N250 per dollar”. Commercial banks in Nigeria are also guilty of this.
A digital media professional* told me on Tuesday that Nigeria’s Guaranty Trust Bank charged it over N300 to a dollar when she used her debit card to pay a Uber service. Another media professional* who received some dollar payments from clients abroad said his payment which was done with his naira account ended up on an exchange rate of about N200 to a dollar. In other words, Nigerian banks have been selling dollar to customers at the parallel market rates but they buy using the official rates. With the naira to have fallen to 305 to a dollar, a bank customer may lose as much as N100 on each dollar to the bank. The banks are the biggest gainers in the naira’s current state and as far as they are concerned, this may last a little longer and fill their pockets with more dollars.
The CBN is mistaken; the “rent-seeking behaviour” does not end with BDCs, banks are worse. For what it’s worth, BDCs give people the true value of their money but banks only remember the true value when it swings in their favour.
While the naira keeps falling and the forex reserves keeps depreciating as oil price slump continues, the CBN should do what is right.
* The professionals asked not to be named in my article