The Central Bank of Nigeria (CBN) has warned commercial banks about facing consequences for participating in unlawful foreign exchange sales.
This comes as the naira’s value drops to over N950/$1 in the parallel market due to a scarcity of forex.
There are allegations that deposit money banks are directing most of their forex to the unofficial foreign exchange market instead of serving their customers.
Acting CBN Governor, Folashodun Shonubi, conveyed this during a lecture titled, “Diaspora Remittances and Nigerian Economic Development” in Abuja.
Shonubi stressed the need to take strong measures to curb illegal remittances and guide them through proper channels for optimal economic growth.
In efforts to address this issue, Shonubi revealed the establishment of a commission that will conduct surprise visits to banks accused of engaging in unauthorized dollar sales.
He emphasized, “We need to publicly identify and criticize commercial banks involved in such wrongful practices.”
Shonubi also highlighted the limitations of the current remittance system, estimating that transferring money to Sub-Saharan Africa from the diaspora incurs a cost of about 8-9% for every $100, which is among the highest worldwide.
Despite these challenges, Nigeria received around $16.7 billion in remittances, with a significant portion occurring outside the official foreign exchange market.
“We are making efforts to encourage individuals to utilize formal channels for their transactions, rather than relying on informal methods, which have proven difficult to regulate,” Shonubi stated.
Shonubi acknowledged the impact of incentives in attracting people to the formal market, even though the N5 refund through the Naira 4 Dollar scheme was deemed ineffective and subsequently discontinued.
He announced plans to rename the foreign exchange market, formerly known as the I & E market, to the Nigerian Foreign Exchange Market, as it is the only market recognized by the CBN.
Ayodele Adeleke, the Commandant of the National Institute of Security Studies, emphasized the significance of the lecture series in enhancing the country’s understanding of security matters.
He noted that the series is a strategic component of the 10-month course, aiming to promote and centralize the program’s focus.
In a related context, Shonubi attributed the depreciation of the naira against the dollar and the challenges in managing the foreign exchange market to the diversion of diaspora remittances to unofficial markets, such as the parallel market.
Many of these remittances arrive in Nigeria as dollars and are not formally documented, leading them to enter the parallel market. Shonubi also highlighted that the lack of regulation in the parallel market makes it susceptible to criminal activities.
