By Fola James
The Federal Government has devalued the naira, again, in a bid to unify the rate at which the national currency is exchanged for the American Dollar at both official (Nafex) and parallel markets. The currency has been facing stability problems against the greenback, as the US currency is known, forcing the government to devalue it three times in the last one year.
Figures released by traders at the end of work, on Monday, indicate that the dollar is now traded for between N480 and N500 at the black market.
The Central Bank of Nigeria, CBN has been trying to prevent the naira from sliding further through various interventions, such as ‘dashing’ N5 on every $1 Diaspora remittance, following an all time fall, last December, when the naira was exchanged for over N500 to a dollar. The apex bank, said last December that it was targeting about $2 billion inflow monthly from diaspora remittances.
According to a circular released, on March 5, by the CBN, the Godwin Emefiele-led bank said the introduction of “CBN Naira 4 Dollar Scheme” would serve as an incentive for senders and recipients of international money transfers. The directive takes effect from Monday March 8 and will end on Saturday May 8, 202, the government bank said.
Signed by A.S. Jibrin for the Director, Trade and Exchange Department, the circular said “In an effort to sustain the encouraging increase in inflows of diaspora remittances into the country, the Central Bank of Nigeria (CBN) hereby announces the introduction of the ‘CBN Naira 4 Dollar Scheme’, and incentive for senders and recipients of International Money Transfers.
“Accordingly, all recipients of diaspora remittances through CBN licensed IMTOs shall henforth be paid N5 for every USD1 received as remittance inflow. In light of this, the CBN shall through commercial banks, pay to remittances recipients the incentive of N5 for every USD1 remitted by sender and collected by designated beneficiary.
“This incentive is to be paid to recipients whether they choose to collect the USD as cash across the counter in a bank or transfer same into their domiciliary account. In effect, a typical recipient of diaspora remittances will, at the point of collection, receive not only the USD sent from abroad but also the additional N5 per USD received. Please note having discussed with banks and IMTOs, the scheme takes effect from Monday 8 March 2021 and ends on Saturday 8 May 2021.”
The Minister of Finance, Zainab Ahmed announced, in Abuja, on Monday that the Nigerian Autonomous Foreign Exchange, NAFEX window which applies to importers and exporters will now apply to all, including government official transactions.
Ahmed said “The government will start to use the flexible rate, that has until now applied to investors and exporters, for government transactions too. Within the government and the central bank, there is only one official rate and that’s the Nafex rate,”
The magazine, however, learnt that the government decision was not unconnected with pressure from the World Bank and International Monetary Fund, IMF for the devaluation of the naira, as part of the conditions for the Buhari administration to obtain $1.5 billion from the development partners, who severally have demanded the abolition of multiple exchange rates and the adoption of a unified and flexible exchange rate regime.
Apart from this, importers and exporters have seriously complained of scarcity of the US currency, urging the CBN to devalue the naira further as the current exchange rate cannot be sustained.
The government had in March 2020 devalued the naira twice in a bid to close the gap between the official rate and the black market rate.
Meanwhile, the magazine learnt that the current rate at which the naira is exchange for the dollar, is still not acceptable to the World bank and IMF which are likely to demand for more action on the issue in coming months.
