The recent raiding of the Bureau de Change (BDC) operators in some parts of the country including Abuja, Kano, Lagos and Oyo states by the operatives of the Economic and Financial Crimes Commission (EFCC) is arbitrary and is capable of igniting panic in the system. The raid is to safeguard Nigeria’s foreign exchange (forex) market and combat activities of speculators. But, it is obviously not the solution to the forex crisis bedeviling the country.
This is not the first time security agents would raid BDCs. In July and November 2022, the EFCC similarly raided BDC operators in Wuse Zone 4, Abuja and Wapa forex market in Kano, respectively. It is pertinent to note that BDC operators represent a segment of the market. Banks and some big companies are also involved and some of them are neck-deep in forex hoarding. Therefore, raiding the BDCs is only a quick fix.
The problem is huge enough and the economy is bleeding. At inception of this government in May 2023, the official exchange rate was about N460.45 per dollar. The black-market rate was about N766 per dollar. The value of naira has continued to fall despite measures to curb the problem. Currently, there is uncertainty in the market as naira has hovered between N1,500 and N1,970 to a dollar in the last few days. The dollar rate is estimated to rise further. The International Monetary Fund (IMF) warned that naira might further depreciate by 35 per cent to N2,081/$1 in official market this year following the absence of local production and the recent liberalisation of commodity imports.
No doubt, this is what obtains when government implements economic policies that are not well thought-out. The unification of the forex market was done without looking at the pros and cons of the policy. Economic advisers did not advise the President well and government also failed to listen to expert advice from the outset. It has failed to address the fundamental issues that led to the forex crisis.
The style of this government is faulty from the beginning. President Bola Tinubu, for instance, announced removal of fuel subsidy on his inauguration day as president without considering the implications on the other sectors of the economy and without any plans to mitigate the crisis that was bound to follow.
Apportioning blame to others as Vice-President Kashim Shettima did recently is living in denial and postponing the evil day. Shettima accused some forces of undermining the efforts of the current government to stabilise the economy and were hell-bent on plunging the country into a state of anarchy. He announced the present administration’s plan to raise $10 billion to increase forex liquidity to stabilise the naira and grow the economy.
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, recently blamed the forex crisis on foreign school fees and medical tourism. The CBN boss noted that Nigeria spent over $40 billion on these two sectors between 2010 and 2020. Foreign education expenses and medical treatment reportedly gulped $28.65 billion and $11.01 billion respectively within the period. Cardoso noted that the Federal Government also spent $58.7 billion on Personal Travel Allowances (PTAs) within the same period. He further observed that the Nigerian forex market was facing increased demand pressures, resulting in a continuous decline in the value of the naira. Causative factors, he said, included speculative forex demand, inadequate forex supply due to non-remittance of crude oil earnings to the CBN, increased capital outflows, and excess liquidity from fiscal activities. Invariably, economic policies in the past nine months have not produced the required result. It is not too late yet if this government can sit down and think about how to contain the forex crisis. With sound economic policies and timelines, the naira will bounce back. The starting point is to admit that it has made mistakes. There must be a blueprint that will take care of the micro-economic environment. Patience of Nigerians is growing thin. The situation has affected manufacturers. Government should be more proactive in handling the situation.
Revamping our education and health sectors should be part of the solutions. If workers in these sectors are paid very well and a minimum of 15 per cent is allocated in the annual budget to each of the two important sectors, it will go a long way in stemming the exodus of thousands of professionals to foreign countries for greener pastures.
Government should diversify the economy to ensure that we produce more than we consume. We have a comparative advantage in the agricultural sector. Hence, government should ensure the security of life and property of farmers and investors so we can also export commodities that can earn us dollars. Economic policies should be friendly such that they will attract local and foreign investments. Let there be holistic reforms, which will address the economic challenges and ensure sustainable economic growth.