The naira has, in over 18 months, remained stable at both the official and parallel markets, despite several odds facing it ahead of the 2019 general elections.
President, Association of Bureaux De Change Operators of Nigeria, Alhaji Aminu Gwadabe, while addressing journalists in Lagos recently, commended the CBN’s financial sector reforms and the contributions of the Bureau de Change operators to the current exchange rate stability, as against the common practice of currency devaluations and depreciations across the world at election times.
The naira exchanges at N306/$1 in the official market and N358/$ in the parallel market despite election fears.
Gwadabe said that the absence of foreign exchange spikes and volatility before and during the 2019 election year was a major achievement by the CBN and Federal Government.
“The dexterity of government’s policies in ensuring that naira remained stable in an election year is commendable. Election years, as witnessed during the 2015 general elections, are marred by exchange rate volatility and spikes in the market,” he said.
He disclosed that financial pundits had, in early 2016, speculated that the naira would depreciate to as low as N1000/$.
The election period of 2015, he added, witnessed over $100 billion capital flight outside the country. The activities of currency hoarders, speculators and rent seekers reached its peak in 2015.
The ABCON boss said the trend in the foreign exchange market during this year’s election showed hope for the economy, sustained exchange rate stability, adequate dollar liquidity, increasing foreign capital inflows and, most importantly, a unified and convergent exchange rate of the BDCs and the parallel market. These feats, he said, were commendable by all standards.
On deepening capacity/skills of industry operators, Gwadabe appealed to the CBN to issue Letter of Consent to ABCON proposed training institute, adding that this was going to boost the current ABCON management’s commitment to capacity building for its members to stimulate competency in the sector and make room for better foreign exchange management.
Gwadabe also listed factors that led to the current successes in the foreign exchange market, saying, “First, I want to congratulate the leadership of the CBN for well coordinated, proactive exchange rate management strategies, which include creation of several foreign exchange windows to deepen liquidity and price discovery, restriction of foreign exchange on 42 items that can be produced locally, self sufficiency in rice production and continuous partnerships between the apex bank and BDCs, which all led to the current exchange rate stability enjoyed in the country.”
According to Gwadabe, the contribution of the security agents in the effective surveillance of Nigeria’s boarders/ airports to checkmate illegal foreign currency evacuation have in no small measure strengthened exchange rate and promoted economic growth.
“The BDCs have remained resolute in ensuring sustainable and stable exchange rate, price discovery and uniformity in the market pricing for the dollar against the naira. The current one per cent transaction margin that operators take is not sufficient for BDCs’ sustained operation, and totally falls below global standard of 10 per cent,” he said.
He pointed out that the CBN-licenced BDCs, under the aegis of ABCON, were not in business solely to make profit, but to protect the local currency and ensure that the economy thrived through their contribution to job creation and improved dollar liquidity in the economy.
Gwadabe said the BDCs would continue to operate within the law and set regulation, and were bound to even perform better, given the ongoing automation of BDCs’ operations though the ABCON Live Run Automation Portal that had continued to integrate each of the over 4,500 CBN-licenced BDCs across the country.