Dr. Wunmi Bewaji, a securities and financial regulation law expert, said that the directives of the Central Bank of Nigeria (CBN) mandating the International Money Transfer Operators (IMTOs) to pay remittance in naira will prevent the hoarding of the available but scarce forex and would also prevent speculations by the people who hoard the money.
He spoke to our correspondent on while affirming that, it was a step in the right direction.
Recall that on January 31, in a published document addressed to the IMTOs, CBN ordered the operators not to facilitate money transfers from Nigeria to other countries.
In other words, the IMTOs will now only pay in naira.
Speaking further, the Financial Expert said, although the Nigeria government through the Central Bank of Nigeria (CBN), remains the highest suppliers of the forex exchange, and one would have expected the country to benefits from the enterprise through forex remittances, but unfortunately it is not.
According to him, it is a right step in the right direction because for the first time, the directive is now creating a two way traffic exchange regime, whereby people who consume foreign exchange, for example importers, students, tourists and the “japa” people (emigrants), medical tourists, property buyers, and people engaging in money laundering, entered the market and purchase foreign exchange whether through the bank or through the Bureau de change.
He noted Nigeria has an Annual Diaspora Remittance in the region of $30billion, but 95% of this money are kept outside the official system and this is one of the problems facing the Naira.
So this new directives will solve the two problems of: Problem of hoarding of available scarce forex, and would also prevent speculations by the people who hoard the money.
“The only supplier or the biggest supplier of foreign exchange in the market is the government. So when people go the market and access foreign exchange, whether at the Bank or at the Bureau Exchange, and they travel abroad and engage in activities abroad, one would expect that Nigeria as a country should be able to benefit from that enterprise through forex remittances.
For example, if you travelled abroad, you bought foreign exchange, maybe you pay your school fees, paying thousands of Pounds, thousands of dollars as school fees, which you sourced through the Nigerian market and then you send money home let’s say $5000, $10000, $20,000
Recalled that the apex bank described the new directive as a move to, “liberalise the forex market and ensure transparency”.
Despite the decision to float the naira, the currency has witnessed even more volatility as the CBN attempts to clear forex backlogs worth about $7bn.
Wunmi noted that, the apex bank and by extension the economy will benefit more from the directives because feelers, unpatriotic Nigerians who are trying to outsmart the system either through Cryptocurrency and other means will be contained by the apex bank.
“We are already getting some feelers of some unpatriotic Nigerians who are trying to game or outsmart the system, by saying that they are going to by-pass this (IMTO) and start using cryptocurrency and that is where the recent lifting of the ban on cryptocurrency is so much laudable. Because Cryptocurrency is now recognized, government can now regulate it and ensure that it is not allowed to undermine the financial system.
So this is a good step in the right direction as it is done all over the world, if you take dollars to the United Kingdom, you cannot spend dollars in the United Kingdom, you have to go to the bank or go to a currency bureau and change it and be given the legal tender of that particular country.
If you take pounds to the United States of America for instance, you go to the bank or currency Bureau and change your pound to dollars.
“So Nigeria should not be an exemption, this is a right step in the right direction, and within a very short period of time, I am sure we will start seeing the benefits of that”, he said.
