CBN

By Sabiu Abdullahi

A Federal Capital Territory High Court in Abuja has granted bail to the former Governor of the Central Bank of Nigeria, Godwin Emefiele, in the sum of N300 million.

This comes after his arraignment on charges related to the unlawful redesign of the naira notes. 

Emefiele pleaded not guilty to all four counts, which include approving the printing of N684.5 million and unlawfully withdrawing N124.8 billion from the Consolidated Revenue Fund of the Federation.

He also denied disobeying the direction of the law with the intent to cause injury to the public during his implementation of the naira swap policy. 

Justice Maryanne Anenih granted Emefiele bail, citing that “a defendant is entitled to bail and presumed innocent until proven otherwise.”

The bail conditions include two sureties, who must be responsible citizens and own property worth the bail sum within the FCT.

The sureties must also deposit two recent passport photos alongside their National Identity cards or international passports. 

Emefiele is prohibited from travelling outside the country without the permission of the court. The trial has been adjourned until May 28.

By Uzair Adam Imam

Central Bank of Nigeria (CBN) employees have expressed profound apprehension as the specter of job loss looms large following the appointment of Dr. Olayemi Cardoso as Governor.

In interviews with journalists, CBN workers voiced concerns that no department within the apex bank seems immune to the ongoing wave of terminations.

This unease intensified with the recent dismissal of another 50 colleagues, bringing the tally to approximately 117 employees shown the door in just 20 days, spanning 29 different departments.

Among those affected are directors, deputy directors, assistant directors, principal managers, senior managers, and lower-ranking staff.

One employee lamented, “We’ve witnessed indiscriminate layoffs in procurement, development finance, and medical services.

“This trend suggests that other departments might face the same fate soon.

“I fear they’ll target those who worked closely with the sacked directors. Such apprehension doesn’t bode well for productivity or the system.”

Another senior staff member revealed, “Many sacked individuals received their letters quietly and left their offices feeling helpless due to the systemic structure.”

Under Cardoso’s leadership, the CBN has undergone numerous changes in policies and personnel, deviating significantly from the tenure of his predecessor, Godwin Emefiele.

Even CBN vendors have voiced grievances, as some who completed contracts since last June await payment indefinitely under the new management, amidst suspicions that they might have benefited from Emefiele’s administration.

Baffa Kabiru Gwadabe, PhD

When I first saw the news, I was overwhelmed by the efforts of Mr. Cardoso as the apex Bank Governor trying to stabilize the Naira. In the news cover, it was reported that “the Presidency has warned Forex speculators to discard their Dollars, saying that the Naira will soon appreciate”. But the above statement was said to be made by the President Bola Tinubu’s Special Adviser on Information and Strategy, Mr. Bayo Onanuga, through his Twitter (now X) handle on Thursday 21 March, 2024.

Mr. Onanuga urged Dollar speculators to quickly dump their Dollars to avoid ‘tears’ that may ensue after continued appreciation of the Naira. Mr. Onanuga was reacting to the recent disclosure by the CBN that it had cleared $7 billion foreign exchange backlog inherited by the Bank.

The development was confirmed by the CBN’s Acting Director, Corporate Communications, Mrs. Hakama Sidi Ali. According to her, the CBN had employed the services of Deloitte consult as an independent audit company to judiciously assess the forex backlog claims and all valid claims based on the recommendations of the company were settled by the Bank. She further indicated that all invalid claims or transactions were referred to the relevant authorities for further investigation.

Similarly, the above efforts, coupled with others such as the seeming ‘credibility of the CBN’ in keeping to its policies have made the Naira to appreciate to some levels and also to the rise in Nigeria’s foreign reserve to $34.11 billion early this month, which is almost the highest recorded since the last 8 months. This is welcoming for Nigeria as import-dependent economy and led Mr. Onanuga to talk to speculators in his tone of ‘Dump Your Dollars’. The ‘dumping of the Dollars’ is my point of entry from which I want to make some remarks.

Let me start by saying or informing Mr. Onanuga that the Dollar crisis in Nigeria is beyond speculations. To a greater extent, it is an issue of ‘store of wealth or value’ using the Forex, specifically the US Dollar. Many Nigerians that had the opportunity of accumulation of ‘large wealth’, try their ways in ‘safe-keeping’ same by converting certain amounts of Naira to the Dollar or other major currencies like the Euro, the Sterling Pounds etc. This has remained the practice in the country and has reached the extent of what I called the ‘unconscious journey’ or the ‘hardened behaviour’ of not seeing the Naira as any promising currency that is stable. In other words, the Naira will always keep depreciating.

With the kinds of policy efforts by the CBN and the Federal Government, this behaviour or trend may have its last gate. What I am saying, in short, is that the practice of scouting and safe-keeping of the Dollar at whatever rate to keep in ‘graveyards’, ‘underground safe-tanks’, ‘security safes’, ‘travelling bags or brief cases’, ‘laundering overseas’ and ‘deposits in commercial banks’ to mention but a few storage strategies of the Dollars may be curtailed.

I now ask some questions regarding the calls for ‘dumping’ by Mr. Onanuga. If Nigerians that had scouted and stored the Dollars were to repent and bring out some or all of their stored Dollars, where should they dump them? Is the dumping ground ‘safe’ without creating a new round of speculations and corruption? Are the dumpers ‘safe’ from stigmatization and punishment? Are the dumping sites going to be the CBN like during the New-Old Naira notes swap, the commercial banks or the BDCs or new hubs? Will the Dollar holders be allowed to spend the Dollars domestically for their transactions? The questions are many and could go on and on, but I stopped at just number 5, as other people may ask some more questions.

For some of the questions asked above, the answers may be very clear, just like the water colour in the day time. All that is needed in answering those questions is for the CBN and the Presidency to be more proactive and strategic enough in handling the long-standing crisis of the Dollar. This is just to say that there is a better need for change of strategies and operations.

The duo should greatly be reminded of the popular saying that ‘once-beaten, twice shy’. I hope to focus specifically on providing only 2 answers based on my little understanding and focus of the rejoinder, the ‘dumping of the Dollar’ and the ‘domestic spending of the Dollar (dollarization)’.

The dumping should strictly be accommodated by the CBN and new accredited dealers or service providers that are trustworthy other than commercial banks or the BDCs. The commercial banks and the BDCs had been tried and tested at different times and different exchange rate regimes but have failed in their own domains. For instance, most commercial banks hoard, receive bribes, kick-backs, brokering or profit from the CBN official Dollar allocations, thereby further widening the gap between the official rate and the black-market rates.

For the BDCs, they are the agents, on many occasions, that served as the foot-soldiers in scouting and mopping-off all the available Dollars in the market with huge Naira for their clients and launder same in some instances.

Additionally, the Binance crypto market speculations of the rates appeared to be new in the perpetuation of Dollar atrocities in the country but still cannot be ignored.

On the answer to the question of spending the stored Dollar domestically, the answer is a resounding yes. Those with Dollar currencies in their possession should be allowed to transact at accredited points and this will ensure more liquidity of the Dollar domestically and reduce demand pressure to squash undue speculations and arbitraging. Allowing the Dollar to co-exist with the Naira in the domestic economy at reasonable scale is called ‘partial dollarization’. This is important because the Dollar in Nigeria based on the recent happenings and the CBN’s approaches is ‘strangled’, ‘suffocated’, ‘compressed’, and ‘thirsted’ for the Naira. So, what the Dollar now needs the most include but not limited to ‘some breath’, ‘exit-doors’, ‘chimneys’, ‘exhausts’ and ‘water’. So, Mr. Onanuga, the issue is not only about the ‘dumping’ but the provision of ‘sustainable dumping sites or exit-doors or chimneys for the strangulated Dollar’.

Moreover, I know some economists and others will question the very proposal of ‘partial dollarization’ of Nigeria, where Dollar will be used as a medium of exchange in addition to the Naira. Their major argument will be that the ‘partial dollarization’ will jeopardize Nigeria’s CBN monetary policy autonomy, because the CBN has no control over the Dollars that will be in circulation in the country. This is very true but with proper monitoring of the inflationary trends, this can be dealt with but it is good that I remind my colleagues in Economics of the concept of ‘unholy trinity’; where it is practically not possible to control the trinity at the same time. The unholy trinity is made up of the fixed exchange rate regime, independent monetary policy and free capital movement (see Figueredo et al., 2023).

Therefore, dollarization is necessary for Nigeria as it has already been practiced in many countries in the World and is one of the hidden secrets for their stable exchange rate systems or regimes. For those that visit countries such as the UK, US, Turkey, UAE, China, Germany, Saudi, Japan etc, they find at the airports currency exchange boots to convert currencies at ease and also realize at some hotels and malls or restaurants, price menus being quoted in 2 or more currencies for one to choose. Therefore, Nigeria should start its own journey.

On a final note, let me make little summary in bullet points to fine-tune the statement by Mr Onanuga that says ‘Dump Your Dollars’ but the ‘dump’ should be in this order:

• Dump your Dollars with the CBN at its various State offices and Headquarters;
• Dump with new aggregators to be approved by the CBN for onward submission to the CBN at a much regulated and controlled service charges;
• Dumpers or depositors of the Dollars must not have domiciliary accounts but for those that have one, part of the amounts could be lodged into the accounts;
• Domiciliary accounts in Nigeria need to be reviewed with a view to embracing the best global practice for the stability of the Naira;
• There should be authorized currency exchange boots at major International airports in the country for small exchanges, like buying and selling of not more than $1,000 or so for travelers in and out of the country.
  For the case of ‘partial dollarization’, the following are recommended:
• Real estate or physical assets and automobile dealings could be accredited to receive Dollars under stipulated guidelines and this will ease their trouble scouting for Dollars for their imports;
• Major shopping malls and stores, restaurants, hotels/suites, hospitals (private), pharmacies, schools (private and all categories) should be accredited to receive Dollars under the CBN stipulated guidelines;
• Entertainment industry and certain concerts in major cities of Nigeria such as Lagos, Kaduna, Abuja, Portharcourt, Benin, Kano, etc should be allowed to receive Dollars for their gate fee charges under the CBN stipulated guidelines.

Thank you and see you next time.

Dr. Gwadabe (Baffa) is an academic staff of Bayero University Kano, Nigeria, from the Department of Economics. He can be reached at: bkabirugwadabe@gmail.com

By Haruna Chiroma

Binance is widely regarded as the largest cryptocurrency platform globally, facilitating billions of dollars in transactions daily. As of March 3 2024, it had over 179 million registered users across 100 countries and supported over 30 languages. Despite its prominence, this emerging financial institution operates with relatively lax oversight from financial regulatory agencies, unlike traditional financial institutions. This lack of stringent policing renders the platform vulnerable to illicit transactions. 

However, Binance also plays a significant role in fostering economic growth and providing earning opportunities for both digital natives and digital immigrants. Established in 2017, Binance rapidly gained widespread acceptance, particularly among digital natives, spreading rapidly like wildfire. 

Binance has encountered significant resistance from governments worldwide, citing concerns over its lack of transparency and regulatory issues. Numerous countries have completely banned Binance from their cyberspace, prohibiting transactions within their borders. These countries include China, Malaysia, Italy, Vietnam, the Philippines, Thailand, Australia, and several others. Despite all this, Binance is boldly embracing the wave of AI to stay competitive in the cryptocurrency market. 

The company has incorporated an AI token known as “Sleepless AI” into its platform, which is available on the Binance Launchpool. A visit to the Binance website indicates a listing of the top AI crypto tokens according to market capitalisation, with a market cap of over $7 billion and over $1.3 billion in trading volumes. 

Despite being banned from Japan, in 2022, Binance made determined efforts to re-enter the Japanese crypto market by expressing interest in acquiring Sakura, a Japanese crypto company. In another development, Binance sought a crypto license in Germany to facilitate transactions within the country’s crypto market, aiming to expand its presence across Europe. 

However, the crypto giant encountered regulatory hurdles from German financial regulators. In a prompt response, in March 2023, Binance announced the withdrawal of its license application. Following sanctions imposed on Iran, sidelining the country from traditional financial systems, Iran turned to Binance as an alternative gateway to financial institutions. Blockchain data reveals that between 2018 and 2022, Binance facilitated over $8 billion worth of transactions for Iranian firms. 

Banning Binance from a country does not necessarily prevent Binance customers from finding alternative means to conduct transactions within the banned country’s crypto market. The Wall Street Journal, published on August 2, 2022, stated that Binance successfully facilitated over $90 billion in transactions in one month within China’s crypto market. 

In the current digital age, blocking access to Binance is unlikely to be effective. Users can easily bypass restrictions by installing a Virtual Private Network (VPN) with a fleet of thousands of servers across many countries, choosing a server in a country where Binance operates, and accessing the platform with minimal effort. 

In 2021, Binance encountered regulatory challenges in Thailand, with the country’s financial authorities accusing the platform of operating without a license. This led to filing a criminal complaint against Binance with the Thai police. Later, Binance was finally banned from operations in Thailand.

Binance finds itself entangled in a legal dispute with US authorities, facing accusations of violating federal money laundering laws by neglecting to report more than 100,000 transactions deemed suspicious. Prosecutors argue that Binance serves as a prime environment for ransomware transactions (a cyberattack method that denies victims access to their computers until a specified ransom is paid via payment systems) and the exchange of payments for child abuse materials. In what appears to be an effort to resolve the matter out of court, Binance has opted for a plea bargain with US authorities. 

Under the terms of that agreement, Binance agreed to pay the US authorities a substantial fine of over $4.3 billion ($1.81 billion for criminal acts and forfeiture of $2.52 billion). Additionally, Binance plead guilty to sponsoring terrorism and involvement in money laundering. As part of the agreement, Binance has committed to operating within the legal framework and implementing monitoring mechanisms, as reported by Reuters on February 24, 2024. 

On February 24, 2013, NPR reported that the US Securities and Exchange Commission and Commodity Futures Trading Commission filed a lawsuit against Binance in court. The lawsuit was based on the absence of regulatory oversight, highlighting Binance’s operation without stringent policing akin to traditional financial institutions, artificially inflating trade volumes, and diversion of customer funds. 

Currently, Binance is engaged in a contentious dispute with the Nigerian government, which has resulted in the government blocking access to the platform. The government reportedly fined Binance a substantial sum of $10 billion, though the circumstances surrounding the fine are controversial. Users can circumvent the block by utilising a VPN, as previously discussed. Therefore, legalising and regulating the platform would be more prudent rather than the Nigerian government potentially losing billions in revenue through the backdoor. 

Given that Binance handles transactions in billions of dollars, I argue that it would be unwise to discard the benefits along with the drawbacks (“throwing a baby with the bath water”). Particularly in light of the high levels of unemployment among youths and the prevailing hardships in the country, many young people have discovered opportunities in the world of Binance. Therefore, rather than outright banning Binance from Nigeria, integrating it into its legal framework may yield better outcomes. 

As a short-term solution, Binance should be permitted to continue its operations in Nigeria under stringent control mechanisms established within the country’s legal framework, with critical oversight from entities such as the Central Bank of Nigeria (CBN), Economic and Financial Crimes Commission (EFCC), and other relevant authorities. 

For a long-term strategy, the CBN and EFCC, in collaboration with the Cybersecurity Department of the Federal University of Technology, Minna, should undertake high-impact research to be sponsored by the CBN and EFCC to develop a robust framework for regulating cryptocurrency operations in Nigeria. This framework should balance Nigeria’s legal system and economic growth objectives. 

Emphasising research and development is a globally recognised best practice for addressing societal challenges instead of relying solely on inter-ministerial committees, which may lack the necessary technical expertise, resources and research skills. 

Haruna Chiroma, Ph.D. Artificial Intelligence, wrote from the University of Hafr Al Batin, Saudi Arabia, via freedonchi@yahoo.com.

By Sabiu Abdullahi

The Central Bank of Nigeria (CBN) has announced the suspension of new loan applications under its Intervention Program.

The decision, conveyed through a circular titled “Suspension of Acceptance of New Applications under the Existing Central Bank of Nigeria, CBN Development Finance Intervention Programme,” was addressed to the Chief Executives of banks. 

Sa’ad Hamidu, the Acting Director of the Development Finance Department, signed the circular, signalling a strategic shift in the bank’s operational focus.

This suspension marks a departure from the previous central bank’s emphasis on development finance intervention funds. 

Simultaneously, the CBN has assigned commercial banks the task of recovering outstanding loans issued under these now-suspended programs.

This move raises questions about the central bank’s future approach to economic development and the role of commercial banks in facilitating financial interventions. 

The financial community awaits further details and clarification from the CBN regarding the rationale behind this decision and the anticipated impacts on economic development initiatives.

By Sabiu Abdullahi 

The Central Bank of Nigeria (CBN) has issued a strong caution to the public regarding the surge in illegal Naira banknotes circulating in the country.

CBN’s Acting Director of Corporate Communications, Hakama Sidi Ali, noted the gravity of the issue in a statement released on Friday, particularly highlighting the prevalence of counterfeit higher denominations. 

“The CBN has observed the circulation of counterfeit banknotes, especially higher denominations by some individuals,” warned Mr. Sidi Ali. 

These fake Naira notes are reportedly being used for transactions in food markets and commercial centres across major cities in Nigeria.

The CBN expressed its commitment to collaborating with relevant security and financial agencies to combat the circulation of counterfeit currency. 

“The law provides severe sanctions, including a term of imprisonment of not less than five years, for any person found culpable of counterfeiting Naira notes or any other legal tender in Nigeria,” stated Sidi Ali. 

The public is urged to report suspected cases of counterfeit Naira notes to the nearest police station, CBN branch, or via email at contactcbn@cbn.gov.ng.

In response to the rising concerns, financial institutions and the general public are advised to exercise increased vigilance and adopt precautionary measures to prevent the acceptance and distribution of counterfeit notes.

By Sabiu Abdullahi 

Former governor of the Central Bank of Nigeria (CBN), Muhammad Sanusi II, voiced concerns over the inflationary pressures and devaluation of the naira caused by the CBN’s lending to the federal government through Ways and Means during the administration of former President Muhammadu Buhari. 

He stated this in a recent statement at MTN Capital Markets Day. 

Sanusi highlighted that the central bank had pursued aggressive monetary tightening using various liquidity control instruments, including open market operations, open buyback (OBB), and high T-bill rates. 

This, he noted, demonstrated the bank’s commitment to its core mandate of ensuring financial system stability and controlling inflation. 

Expressing optimism for the short term, Sanusi acknowledged the recent efforts by the central bank to address the issue.

He pointed out that the central bank had initiated a process of aggressive tightening, evident in the OBB rates approaching appropriate levels in the last few weeks. 

While recognizing the central bank’s ability to employ different instruments to mop up excess money, Sanusi emphasized the importance of minimizing costs to both the central bank and the government’s balance sheet.

He noted the necessity of relying more on non-conventional instruments for this purpose. 

Sanusi urged understanding from the audience, stating that the effects of new monetary policies take time to manifest.

He expressed confidence in the current measures being undertaken by the central bank, emphasizing the importance of tightening money, addressing backlogs, and funding the market for achieving stability in the financial system.

By Sabiu Abdullahi 

The Central Bank of Nigeria (CBN) has declared an indefinite extension of the legal tender status for the old design N200, N4500, and N1,000 denominations.

These banknotes will continue to be accepted as valid currency in Nigeria without a specified deadline. 

The decision, communicated in a statement released on Tuesday, is explained as being in accordance with international best practices and aimed at preventing a recurrence of past challenges.

The CBN emphasized the importance of aligning with global standards in this decision. 

Furthermore, the statement revealed that the CBN is actively collaborating with relevant authorities to overturn an existing court ruling on the same matter.

This indicates the central bank’s commitment to streamlining currency policies and ensuring a smooth transition in the acceptance of various denominations. 

As a result of this extension, Nigerians can expect the continued circulation and acceptance of the mentioned banknotes in day-to-day transactions, providing stability and flexibility in the country’s monetary landscape.

By Baffa Kabiru Gwadabe

Over the past few months, Nigeria has been suffering from continuous depreciation of its currency, the naira. The naira has depreciated from barely ₦600/$ in the last three months to ₦1,300/$ today, the 27th of October 2023. This is enormous, considering the loss of value by more than 120%. Many are worried, including my little self, about this development. But the recent propositions of solutions by many provoke such a write-up.

It is good to start with some questions concerning the crisis. What is happening? What went wrong? Who is to blame? What are the ways out? What will be the lasting solutions?

The above questions may not be provided with answers, as many out there know the answers already. The focus should remain on some best practices or exchange rate regimes to hinge on. Let me start with some highlights on the developments in Nigeria’s foreign exchange market.

In 1971, when the Gold Standard was abolished under the Bretton Woods System, several foreign exchange rate management regimes were pursued in Nigeria and other parts of the world. These include the independently adjustable peg, crawling peg, independent peg, collective exchange arrangement, dual exchange and floating regimes. IMF member countries practice six (6) other exchange rate regimes, which were later compressed into three (3) regimes to include pegs, limited flexibility, and great flexibility. These were later decomposed into fifteen (15) regimes, mainly from 1975 to 1998 (see Mishkin, 2007).

All those regimes were adopted unevenly by the IMF countries. This means they practice one or more of the regimes based on their choices and persuasions. By 1999, the IMF proposed eight (8) different exchange rate regimes. They include separate legal tender, currency boards, conventional fixed (pegged against a single currency or basket of currencies or other commodities like gold), pegged within horizontal bands, crawling pegs, crawling bands, managed floating and independent floating (see Mishkin, 2007).

Still, these interchanging regimes continued in Nigeria depending on the available foreign reserves, capital inflows and current account balances. Nigeria’s forex crisis worsened in the 1980s when the US economy pursued Nigeria to devalue its currency by 10% and other scenarios. However, some attention will be given to the last ten years or so, particularly the administration of President Muhammadu Buhari or the reign of Godwin Emefiele as the CBN Governor (2014 – 2023). Some reflections would also be made on earlier antecedents before the Buhari’s and current administrations.

Nigeria has pursued two dominant exchange rate regimes: the Retail Dutch Auction System (RDAS) and the Wholesale Dutch Auction System (WDAS). The RDAS is an exchange rate regime introduced in Nigeria in 1987. It focuses on buyers (end-users or customers) of Forex (USD) to bid for the prices, and the marginal bidder is supplied with the quantities by the CBN through authorized dealers. Under the RDAS, the inept dealers are supplied less, while the highest bidders are penalized for rent-seeking and invitation for depreciation. 

The WDAS, on the other hand, is an exchange rate regime targeted at maintaining the gains of the RDAS and the continued liberalization of the forex market. The WDAS came into operation in Nigeria in February 2006 and allows authorized dealers to buy forex on their accounts rather than on behalf of end-users. Also, the authorized dealers are carefully watched by the CBN, and the dealers are also allowed to trade in the interbank forex market. During that time, the CBN pursued other special interventions of forex sales to Deposit Money Banks (DMBs) and direct sales to licensed Bureau de Change (BDCs). The CBN further mandated that DMBs increase Business Travel Allowance (BTA) and Personal Travel Allowance (PTA) from $2,500 and $2,000 to $5,000 and $4,000 per quarter, respectively. All these policies were sustained in positive directions as the naira continued to appreciate by 2.6%, 8.7% and 5.8% for 2006, 2007 and 2008, respectively.

However, at the beginning of 2009, there was an observed forex policy reversal and the reintroduction of RDAS to reduce capital outflows and depletion of foreign reserves. The interbank trading segment was suspended. This was followed by sales restriction of forex to oil companies and government agencies and sales of forex to BDCs. But towards the end of 2009, the CBN called for recapitalization of BDCs in what they call ‘Class A’, while those that did not recapitalize are called ‘Class B’ BDCs. Both ‘Class A’ and ‘Class B’ BDCs can bid a maximum of $1 million and $250,000 respectively.

Similarly, by 2016, Nigeria’s forex market was further liberalized. During the period, the average naira-dollar exchange rate was N197/$ at the interbank window, representing a depreciation of 18.7% (as the exchange rate was N160/$ before 2016). However, one worrying thing remains: the premium between the interbank and BDC sections was about 41.5%. After this, some other forex regimes were still embraced under the administration of President Buhari and Godwin Emefiele. For instance, forex primary dealers (FXPDS) and non-FXPDS were introduced into the forex market in 2017.

In addition, longer-term derivatives like forwards trading from 1 to 3 months tenor and up to 2 years were introduced. The exchange rate was relatively stabilized at averages of N231.76/$ and N351.82/$ at interbank and BDCs, respectively. This has created many arbitrage opportunities for those with access to the interbank rates to continue to worsen the forex market. Such a trend continued for 2020, 2021, 2022 and until 2023. For instance, as of March 2023, the official rate was N462/$, while in the black market, it was an average of N750/$. 

The sacking of Emefiele as the CBN Governor and the appointment of the acting CBN Governor, Mr Shunobi, in June 2023, where the latter tried to close the gap and arbitrage opportunities, moved the official rate from N474/$ to N664/$. With the appointment of substantive CBN Governor in September 2023, Mr Cardoso, the apex Bank, moved on with complete deregulation of the forex market, and this has led to incessant depreciation of the naira to a historic level of N1,300/$. However, it now appreciates an average rate of N1,000/$ and other rates depending on information and locations.

The next thing to talk about is the proposed solutions to the lingering naira-dollar crisis. However, it is important to note that the CBN’s recent and previous exchange rate policies are floating in nature or simply deregulating the forex market, and this is counterproductive as it has not provided the desired results, especially recently. This is because floating regimes are usually for export-dominant countries such as China, the United States, Japan, Germany, India, Russia and Saudi Arabia, among others, as argued by the Mundell-Fleming model. Nigeria is a predominantly import-dependent economy. As such, depreciations affect inflationary levels in the first round (exchange rate pass-through to inflation) and at the ‘second-round’, popularly known in the current literature as the ‘second-round effect’.

To end this submission, the CBN needs to do one or two things to exit from the naira-dollar crisis, and these include:

(1) Invite a small but huge ‘Conference of the Parties’ (COP) to deliberate and take appropriate decisions for implementation immediately;

(2) Under the COP, dollarization with its components; official dollarization, unofficial dollarization, partial dollarization, etc should be reviewed;

(3) Hard-peg exchange rate regime should be deliberated;

(4) Managed-floating regime should be discussed;   

(5) Most importantly, sources of the forex demand pressures must be exposed.

Baffa Kabiru Gwadabe wrote from Bayero University, Kano, via bkabirugwadabe@gmail.com.

By Sabiu Abdullahi 

The Central Bank of Nigeria (CBN) has debunked rumors of a naira redenomination in the near future. 

In a statement, which was signed by the bank’s Director of Corporate Communications, Isa AbdulMumin, on October 31, 2023, the apex bank states that the contents of a text message circulating widely suggesting that the CBN plans to redenominate the naira in January 2024 are “misleading.” 

It further states that the authors of the text message “modified text eked from an old policy move by a previous CBN Governor in 2007 to make it appear recent.”  

The CBN advised the public to ignore the rumors, as they are “speculative and calculated to cause panic in the polity.”

The bank also stated that any reforms to the naira would be subject to “laid down procedures in line with the provisions of the CBN Act, 2007.”