- Summons CBN Governor Over Naira Plunge
The Senate, on Wednesday, directed its Committee on Banking, Insurance and Other Financial Institutions to assess the impact of the Central Bank of Nigeria (CBN) intervention funds to support critical sectors of the economy.
It also mandated the Senate Committee on Banking, Insurance and Other Financial Institutions to conduct an assessment of CBN intervention funds and the declining value of Naira to come up with sustainable solutions. The lawmakers resolved to call on the CBN to urgently intervene to stop the rapid decline in the value of the Naira vis-à-vis the Dollar and other international currencies.
According to a statement by Ezrel Tabiowo, Special Assistant (Press) to the President of the Senate, resolved to summon the CBN Governor, Godwin Emefiele, to educate senators at a closed session on the reasons for the rapid depreciation of the value of the Naira against major currencies of the world.
Both resolutions were reached upon the consideration of a motion sponsored by Senator Olubunmi Adetunmbi (APC – Ekiti North), entitled, “State of CBN Intervention Funds and Free Fall Of Naira.”
Coming under Order 41 and 51 of the Senate Standing Order, as amended, Adetunmbi bemoaned Nigeria’s economic reality amid an urgent call for “extraordinary measures,” noting that the CBN through its numerous multi-sectoral intervention funds, provided special funds to support critical sectors of the economy.
Adetumbi explained that in view of such interventions, it had become necessary to assess the state of implementation and effectiveness of the funds deployed for the purpose, recalling that the CBN in 2021, placed an indefinite halt on forex bidding by Bureau de Change operators (BDCS) and importers over allegations of abuse and mismanagement.
He observed that the halt by the CBN resulted in a spike of the exchange rate, adding that “the two instruments of Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) could only serve less than 20% of the total forex demand by travelers and businesses.”
He expressed worry that the import and export window meant to serve the forex needs of business giants, “has become a rare opportunity that only a privileged few can access.
“These and a number of others have contributed to the excessive scarcity of forex in Nigeria today”, he added, noting that as of July 26, 2022, the exchange rate in the autonomous segment (BDCS) of the foreign exchange market is N670 to US$1, and projected to end at N1000/US$1 by end of the year, based on the current rate of depreciation.
He, therefore, advised the CBN to take new measures to curb forex scarcity and address the sliding rate of Naira exchange.
Contributing, Senator Sani Musa (APC – Niger East), faulted the CBN’s decision to halt foreign exchange biddings, thereby cutting off the parallel market – Bureau de change operators.
According to him, the attempt by the CBN to control the value of the naira with the continuous exclusion of BDCs would only lead to its further depreciation, following which he urged the apex bank to rather ensure the regulation and monitoring of the parallel market.
“What the CBN used to do was to give out $10,000 (USD) to each of these BDCs with a clear directive for it not to be sold above N470 as against the $419 exchange rate. It worked.
“But today, nobody is determining where the rate is going and I can assure you we can’t have that solution because we are only importing”, he said.
Also speaking, the Senator representing Katsina North District, Senator Ahmad Babba-Kaita, suggested the need to encourage foreign investments and attract inflow of other currencies into Nigeria, thereby improving the value of the Naira
“The only way we can access the dollar will be determined by other economies and not ours”, he noted, blaming the lack of foreign investments into Nigeria on insecurity caused by banditry, terrorism and other criminal activities.
Thereafter, they adjourned plenary till September 20, 2022, for its annual recess.
