Last updated on August 7th, 2022 at 12:48 am
You may spend some months or years (depending on your connection) in jail if you are caught buying US dollars with the Nigerian currency, says the apex bank of the most populous African country.
The latest monetary policy became a necessity as the Naira continues to “Lu’le” (that is fall) against other global currencies while inflation and interest rates attained their all-time high in recent times.
But the governor of the Central Bank of Nigeria (CBN), Monetary Commander Godwin Emefiele, isn’t relenting as he continued to fight like a snake cut into two.
And you know what?
Meffy, as Nigerians fondly call him means business, though he didn’t quote any part of the CBN Act that criminalises foreign exchange trading, anyone found culpable will be arrested and prosecuted.
The law empowers the apex bank to take certain monetary actions to protect and defend the battered Naira which is in its worst performance since 1960.
At the Monetary Policy Committee (MPC), the former university teacher warned that those who take withdraw naira from banks to buy dollars are toeing the path of jail, “If the security agencies hold you, you will know the implication of that.”
How the CBN plans to make an arrest
As the apex bank, the CBN has access to the millions of transactions (inflow and outflow) of Nigerians. He vowed that the CBN would conduct investigations and block those found culpable from conducting transactions in Nigerian financial institutions.
According to him, banks will not be left out as banks caught in illegal transactions will be hit with the CBN’s sledgehammer.
“We will place ‘post no debit’ on the defaulting customer’s account. It is a very injurious tool to stop you from conducting illegal flows, either domestic or foreign currency”, Nigeria’s investigative online news gazettengr.com quoted him as saying.
Why Does CBN Want to Stop Nigerians from Buying US Dollar with Naira?
During the long years of military rule, the CBN was ‘forced’ to create a parallel market for licensed Bureau De Change operators to play a major role in the forex distribution chain.
They buy USD, EUR, and GBP from the CBN, which they sell to businessmen, women, and others who need FX for legitimate business.
But in July 2021, Emefiele-led apex bank blocked the channel, saying BDC operators have compromised. It sparked the downfall of the naira against its competitors in the forex market.
Meffy took the action to prevent further deterioration of the naira’s value and the country’s economy, but the reverse is the case as the naira has fallen beyond what anyone has ever experienced in Nigeria.
At the time of this report, one US dollar is worth at least NGN630 on the black market which is more accessible to Nigerians than the politicized CBN official rate.
According to Aboki Forex, a forex price-tracking website, see below the latest black market exchange rate against the Naira:
Several monetary measures deployed by the CBN have worsened the situation more. For instance, Emefiele accused the founder of abokifx (a popular FX tracking website in Nigeria) of inflating the exchange rate for personal gains.
He threatened to arrest Oniwinde Adedotun abokifx founder describing him as an economic saboteur. He accused him of manipulating fx rate on his website.
The site stopped its update on the black market rate. Rather than the naira making any significant gain, it continues its free-fall across the board.
While that action was failing, CBN rolled out another policy. This time, it instructed all commercial banks in Nigeria to reduce the international spending limit on their naira cards to $50, then $20.
At the time of publication, the spending limit is $0, Nigerians can no longer use their Naira cards to make purchase USD transactions.
Most of them, especially bloggers, and small-scale importers were forced to open a domiciliary account and apply for a Dollar Debit card to renew their domain subscriptions or pay for service online.
In a message sent to their customers, some of the banks said, “For increased transaction limits, please use your Visa Debit Multicurrency Card, Visa Prepaid (USD) Card and Visa Gold Credit Card to enjoy transaction limits up to $10,000 and other exciting benefits.”
If the 2021 clampdown on abokifx and stoppage of sales of forex to BDC operators failed to bring back the glory of Naira, the CBN should have known that something it isn’t addressing the main problem of Nigeria’s economy.
Since the Meffy-led CBN sanctioned abokifx and its founders and rolled out several monetary policies to save the naira, more black market FX-tracking websites have been birthed.
The statement by Emefiele that buying the US Dollar with the naira is illegal or any move to criminalise parallel market access to the fx may cripple struggling businesses that depend largely on the black market.
It now takes weeks or months to officially access forex through the Trade Monitoring System of the CBN. How will importers cope with this kind of fx allocation when obviously the authorities know that Nigeria is an importing economy?
It is most likely that the source of livelihood for hundreds of Nigerians (importers) is at risk (the importers).
Apart from making business difficult for businesses, this policy is going to deepen the operation of FX black marketing.
Criminalising purchasing of US Dollar with Naira isn’t the main issue here. It is like Won fi ẹ̀tẹ̀ sílẹ̀ n pa làpálàpá (meaning They left leprosy unattended while preoccupied with treating ringworm.)
Or is it just a simple message to Nigerians that they should begin to warm up for $/NGN1,000 rate?
1 thought on “You May Go To ‘Jail’ for Buying US Dollar with Naira”
One group should be going to jail, and we all know them. They’ve hurt Nigerians’ finances and the economy badly with their incompetence!