Nigeria FX Crisis Result of Poor Regulatory Oversight
Elites destroyed the naira for personal gains, there is no doubt about that, critics said on Monday after the apex bank spotted $2.4 billion fraudulent foreign currency requests lumped into the FX backlog.
However, their success remains an indictment of the quality of the team at the Central Bank. Regulators must be far ahead of the industry under its watch, or else their function will remain in the shadow of perfect criminals. In the recent past, the regulatory function of the monetary authority was diluted with political interest.
It played out wrong for Nigeria as the past apex bank chief mixed political interest with monetary authority management. Many things went wrong including an alleged creative report on Nigeria’s foreign reserves.
The Naira exchange rate couldn’t have survived the slugs from the holes created in the forex market. Yemi Cardoso, the new sheriff seems to be prioritising national interest above the immediate gain the financial services sector cowboys have been pursuing.
Cardoso’s recent revelation of FX infractions by local banks should be subjected to further review. In an interview with Arise TV, the CBN chief said, “We met $7 Billion in unpaid obligations. We had reason to believe we needed to take a harder look at those obligations”.
Then the CBN went ahead to engage Deloitte to do a forensic audit of what is valid or not. The results were startling as $2.4 billion had issues. Some FX requests have no valid import documents while some entities that did not exist got allocations. Some requisitors who asked for FX got more than they asked. Entities that did not ask got FX allocations through shady deals.
CBN said it wrote to the authorized dealers, many of which are deposit money banks with large earnings performance to explain. Sadly much has not been disputed, it said. According to Apex Bank, $2.3 billion of the validly executed ones including Airlines have been cleared. What remains is $2.2 billion.
“We are confident we will address those. We have come to the end of the road”. The Naira remains undervalued, according to the apex bank who continue to maintain that the local currency will stabilise. #Nigeria FX Crisis Result of Poor Regulatory Oversight#
