By Yero, J. I.
Dr. Tilde was quick in thanking CBN for all the benefits which the currency change can bring, including depriving kidnappers and corrupt cash hoarders access to booties and loots. He however ignored that anyone can safely exchange his Naira with dollars just across the next street and both the kidnappers and the corrupt cash hoarders know this. While this change will trigger the rush for dollars instead of the rush for the new Naira notes by the hoarders as in the past, this rush would only further fling our Naira value down the drain (demand/supply mechanism).
Changing a country’s currency from time to time, especially in this era of high-ends technologies, is actually beneficial for a number of good reason. However, considering the past antecedents, the outcomes of past policies vis a vis the sterling credentials of our monetary officials, I don’t think the monetary officials are doing that at the current moment because they actually care about the value of the Naira.
The timing tells one that something is definitely amiss. Right from the ground work, it appears as if they’re just there to continuously keep on ensuring that rent seeking opportunities continue to exist for themselves and their cronies. A number of ground works that could aid in the attainment of the policy’s objectives are left unattended to .
For one, the issue of the country’s forex market is one place to first be sanitized. By giving the forex market one single direction, arbitrage opportunity in there would be drastically eliminated and a fertile ground for breeding workable monetary policies be cultivated with reasonable level of control. Many advocate for total deregulation. For me, I prefer to be held accountable for something over which I have full control. Thus, I rather go with with opposite.
It’s high time that all BDC business concepts be scrapped and banned for good. The enticing arbitrage opportunity provided by the continued presence of BDC would continue to ravage our currency and render major monetary policies ineffective waste of more and more resources – no matter the recipe-mix in regulating them, they’ll continue to beat it.
It is obvious that with BDC around, the mere announcement for the currency change has provided a yawning window of about 2 months within which the purposes will be mostly defeated while at the same time getting the Naira severely thrashed down from being the little bit of crispy note of value that it is today, to raggy worthless paper.
The regulator ought to therefore have assumed the task of full regulation of the market first, to the extent of fixed-pricing, before embarking on this change. To effectively do that, only licensed banks should be allowed to exchange foreign currencies and only through dollar accounts with limited withdrawals and strict supervision
It appears that they aren’t learning (or rather pretend not to have learnt) from their past mistakes – the continuous knots tying and untying… didn’t even pause to wonder why BVN isn’t as effective as it should be. The trillions of turnovers being recorded by POS operators alone is one whirlwind of cascading red flag that enough to attract the attention of regulators to inquire deeply about the nature of these transactions. Is it as a result of successful financial inclusion, or it is something more? Alas they were quick to ignore all the signs and hence read it as a success story of the policy.
With more ease and confidentiality today ever than before the advent of BVN, a terrorist or a corrupt official can send and receive crime proceeds to and from any part of the country through POS without having his name, BVN or Acct No went through the system. And that’s what’s happening daily. In an instant, one good policy (BVN) was rendered almost useless by another policy that’s conceived and implemented by the same regulator, the same spearheads!
BVN and POS are two policies adopted around the same period – one almost immediately after the other. How well do they go together? Compliment each other? Collide with the set objectives of each of the policies???
Let’s not kid ourselves, with their credentials, it is wise to assume that the monetary officials know exactly what they’re doing. They provide one good policy that block a leak in the system and then another policy probably as a backdoor exit – not to get themselves trapped because it is them that the policy may actually affect.
Like the neutralisation of BVN’s objectives by the POS, most of the objectives of the new Naira resignation are most likely going to be thwarted by the presence of BDC in the system. The current exchange regime is a collussal waste of resources and a serious bottleneck that continues to stiffle the Naira value.
With what’s apparent, the failure of the regulator to do the needful on this, would only further deteriorate the value of Naira. Mark my word, it won’t be a surprise to hear that Naira being exchanged at NGN1,000 to a dollar before January 2023 sets in. With the mere announcement of the change alone, Naira is now already trading at about NGN788 to a dollar.
With the so far clumsy approach to handling such a strategic exercise as currency change, one can easily be led to conclude that there’s high likelihood of agency conflicts at play – with the agents (regulator) possibly serving two masters. While they have to show their apparent principals (the public) that they’re working, the attainment of their principal’s goal must not prevent them from attaining their own hidden goals or the goals of their hidden principals. Hence the inaction where action is needed, or conflicting policies that neutralise each other… In the end they must continue to profit at the country’s expense.
Unless…
I like UK a lot when it comes to handling public affairs. May God bless us with true Patriots to steer the affairs of this nation.
Dr. Yero, J. I.
Department of AccountingABU Business SchoolAhmadu Bello University Zaria.+2348066061612
