In a recent move aimed at tackling the ongoing foreign exchange (FX) crisis, the Central Bank of Nigeria (CBN) took decisive action by preventing bank chief executives from leaving the country between July 5 and August 15. This step was taken to ensure their availability to address questions related to the FX crisis, which has been causing concerns across the nation.
The FX crisis, which has been exacerbated by the decision to unify exchange rates, revealed a concerning trend where bank executives reportedly profited by selling foreign currency at exorbitant rates. According to insiders, these executives held significant amounts of dollars and capitalized on the devaluation of the naira, thus earning them considerable profits and elevating their status within the industry.
Unnamed sources have indicated that even prior to President Bola Ahmed Tinubu’s assumption of office, bank chiefs were allegedly favoring their families, friends, and associates by offering preferential forex rates. This practice reportedly resulted in delays for customers seeking to access forex directly from their banks, causing frustration and hindering business operations.
Further revelations unveiled that after the CBN allocated foreign exchange to banks, certain executives engaged in unethical practices such as round-tripping, money laundering, and other infractions. This prompted the CBN to take stringent measures by placing travel restrictions on all bank managing directors, ensuring their immediate availability when needed by the CBN.
Prior to these recent developments, the CBN had been allocating weekly FX allocations to Deposit Money Banks (DMBs) to meet legitimate demands. Nigerians were encouraged to procure FX from DMBs with minimal documentation procedures for valid transactions. The CBN also directed banks to settle customers’ FX demands within 48 hours and to establish teller points at designated branches for various FX requests.
Contrary to being a punitive measure, the travel restrictions were positioned as a call to national duty, driven by the need for close coordination and communication between the CBN and bank MDs. This became especially crucial after the government’s decision to unify exchange rates, which triggered a sharp decline in the value of the naira. The CBN aimed to provide accurate information directly to the President, necessitating direct access to bank MDs for timely updates.
However, the banking industry deviated from the FX policy by extending the processing time for accessing FX for certain transactions, raising concerns about the transparency and effectiveness of the banking sector.
With the travel restrictions now lifted, it suggests that the CBN has regained control over the naira’s decline. While some criticism surrounded the initial decision to restrict travel, the CBN’s decision to lift the ban reflects growing confidence in the banks’ commitment to operate responsibly and transparently.
In a statement by CBN spokesman Dr. Isa AbdulMumin, he expressed unawareness of the travel restrictions and their impact. However, the central bank’s actions indicate a strategic shift towards improving oversight and regulation within the banking sector to stabilize the national currency.
By taking these measures, the CBN aims to curtail the influence of those responsible for the fluctuation in the dollar value against the naira, ultimately fostering a more stable and predictable economic environment for Nigeria.
Source: The Nation Online
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