The Central Bank of Nigeria, CBN, is going after commercial banks involved in foreign exchange round tripping.
The apex bank said this while reacting to allegations that some banks are diverting foreign exchange away from legitimate channels.
The CBN in response to the recent plummet of the Naira exchange rate to over ₦950/$ in the parallel market, coupled with an exacerbating scarcity of foreign exchange, issued a stern warning to commercial banks involved in the unlawful trading of foreign exchange.
The acting CBN governor, Folashodun Shonubi, delivered these crucial remarks during a lecture entitled “Diaspora Remittances and Nigerian Economic Development” in Abuja. Shonubi highlighted the urgency of enforcing stringent measures to combat illicit remittances, ensuring that funds are directed through proper avenues to bolster economic growth.
“We will not hesitate to expose and condemn the commercial banks engaged in such illicit practices,” Shonubi declared unequivocally. Moreover, Shonubi highlighted the shortcomings of the existing remittance system.
He pointed out that the cost of transferring money from the diaspora to Sub-Saharan Africa stands at approximately 9 per cent of every $100, a figure he deemed excessively high and unparalleled globally.
Despite the challenges posed by informal channels, Nigeria has still managed to attract a substantial amount of remittances, with a staggering $16.7 billion influx.
However, a significant portion of these funds bypasses the official foreign exchange market. “We are vigorously striving to incentivise individuals to route their funds through formal channels, steering clear of the convoluted informal avenues,” Shonubi said.
The CBN measures will impact currency markets in a few days time, Shonubi further said after meeting President Bola Tinubu to discuss ways to improve dollar liquidity on the official market. CBN governor Shonubi’s meeting with Tinubu comes after the bank on Friday revealed a $19 billion commitment in derivatives in 2022, nearly the size of the country’s reserves.
Nigeria is looking for ways to shore up its reserves and stem the fall of its currency, which has hit record lows on the black markets two months after trading restrictions were loosened on the official market. Shonubi did not disclose the measures to be introduced.