23

Mar

DOLLAR RACKETEERING AND ENEMIES FROM WITHIN 15022016

2016-02-15

DOLLAR RACKETEERING AND ENEMIES FROM WITHIN
BY HENRY BOYO

''There is nowhere in the world where Monetary Authorities fund Bureaus De Change (BDCs) directly with foreign exchange. The prime patrons of Nigeria's BDCs are predominantly, smugglers of unauthorised items, treasury looters, and others who cannot process formal documentation to access official foreign exchange. Curiously, the CBN's present policy to sell $400,000 weekly to each BDC translates to $1.6bn, for 1000 BDCs monthly.
Indeed, relatively cheaper BDC dollars mean cheaper smuggled goods and increasing distress to local industries and also a boon to treasury looters and capital flight.

"Clearly, the present record breaking revenue from the sale of crude oil is not sustainable, but it is disturbing that we are gleefully throwing more of the official dollar receipts to BDCs, instead of the real sector and infrastructural enhancement; it is equally worrisome, that no less a person than CBN Governor, Chukwuma Soludo, embarked on and extols such a foolish escapade!''  

The above  excerpt is from an article titled "Sale of Official Dollar Revenue to Bureau De Change"; which was published in August 2006 after CBN irresponsibly commenced direct allocation of official forex to BDCs; surprisingly, despite the obvious faux pas, Soludo later raised weekly allocations for each BDC to $1m, i.e. about $3bn monthly to 'officially' promote forex racketeering.

Incidentally, the above piece was sequel to another piece titled "Cheaper Black Market Dollar" published a month earlier; the following excerpts are from that article: 
“In the wake of the Central Bank’s pseudo liberalization of dollar supply, the parallel market Naira rate tumbled from over N140=$1 to today’s rate of about N130=$, leaving a spread of barely N2 from the official rate. Ordinarily, this outcome should be evidence of the success of CBN's monetary reforms to eliminate multiple exchange rates and minimise the attendant economic distortions.

“In essence, however, CBN achieved this feat by bombarding the parallel market with dollars, from our presumably surfeit reserves! Let us remind ourselves that BDCs worldwide, traditionally, serve a relatively small informal or itinerant market; consequently, It is pertinent to ask to which purposes $3bn monthly allocations to BDCs will be applied. The answer would most likely, be for importation of unauthorised goods, and the facilitation of capital flight, round tripping and money laundering by politicians and corrupt civil servants!

“Inexplicably, therefore, CBN is clearly, deliberately, and consciously undermining its mandate for price stability, and instead self inflicting grievous distortions to our nation’s economy.

“For these reasons, some analysts hold that our monetary authorities have grossly misplaced their priorities, and also maintain that CBN's strategy for reducing the gap between parallel and official market rates is akin to smashing a cockroach on a glass table with a sledge hammer! Conversely, these analysts explain that, in practice, the problem is not with dollar supply but the huge pool of naira released into the money market every time humongous Naira allocations are substituted for dollar denominated revenue. Thus, the higher the increase in Naira surplus, the greater the demand for dollars from BDCs and the more serious also will be the distortions caused by smuggling and capital flight and the weaker, ultimately, will be the naira exchange rate, with a train of adverse consequences, such as higher fuel prices and subsidy and inflation in tow."

"Consequently, CBN’s seeming  laissez fair allocations to BDCs is regrettably, obviously a deliberate clandestine strategy to fund the dollar requirements of smugglers and treasury looters while pretending to defend naira value!''

It is inexplicable that the IMF did not recommend that the challenges of multiple exchange rates, a weaker naira, spiraling inflation and stagnant economy could be more positively resolved if CBN’s oppressive dollar monopoly is immediately dismantled to modulate the economy's 'perpetual' liquidity surfeit.'' (see Cheaper Black Market Dollar (July 2006) @ www.lesleba.com).

In November 2010, about four years after the above article was published, Muhammad Abdulahi, CBN's Corporate Affairs Director confirmed in a media statement that “it had been inundated with complaints from foreign countries that some Nigerian travellers indulge in cross-border transportation of large sums of foreign currencies in cash, and that 'Nigerian Customs Service' returns show that large amounts up to $3m cash have been taken out of the country by individuals in single trips (Business Punch, 4/11/2010, pg. 15).  

The truth, of course, is that CBN has no business whatsoever funding BDCs!! The dilemma, however is, If the Apex bank, belatedly holds its nerve on this issue, and immediately stops dollar sales to all BDCs, we will once again witness a widening gap between official and black market exchange rates!  This would invariably provide CBN with a ready excuse to narrow the gap and again officially devalue the naira despite the obvious adverse impact on inflation, industrial production cost, economic growth, and employment!!''

Furthermore, the following is also an excerpt from another article published two years later in October 2012 titled "Currency Trafficking, BDCs & CBN"
''In October, media reports confirmed that two men, Nkem Sebastian and Alhaji Tasiu Kura were apprehended by the Economic and Financial Crimes Commission (EFCC) operatives with about $986,000 found on them enroute to Dubai via Lagos and Kano International Airports respectively. The arrests, came barely 48 hours after the arrest of 24-year old Abubakar Tijani Sherif, whom EFCC described as a bulk money smuggler, with over $7 million cash at the Lagos Airport, en route the United Arab Emirates. Unbelievably, these currency merchants were simply released immediately after forfeiting just 10 percent of the funds trafficked, in accordance with the prevailing authorised slap on the wrist penalty for currency trafficking.

Predictably, CBN’s ill-advised liberal dollar allocations to BDCs may have become a supportive tool for national economic sabotage; it is paradoxical, that, despite its mandate for engendering price stability that will support industrial regeneration and promotion of increasing employment opportunities, the same Banker to government is actually the instigator of our industrial collapse and economic backwardness, corruption and deepening poverty in Nigeria. 

This uncomfortable conclusion is strangely, in sync with popular Punch columnist, Abimbola Adelakun's separate observation in a recent article titled (Buhari, Time We Stopped Lying to Ourselves) that "Like the budget itself, Nigeria was designed to sustain the mechanism through which corruption operates rather than advance the nation". 
This tragic reflection has been, inadvertently, sadly also confirmed, with regards to the obviously misplaced positive public expectations from CBN's strategy for managing Naira stability, by President Buhari's recent revelation, that his government "found out, that some top directors in the Central Bank own Bureau de change businesses"; so according to him, "when the foreign exchange comes, they take it and give government the change" and presumably one may add, smile home with bloated profits from such forex scams at the expense of fellow Nigerians. Ultimately, it took the intervention of a contrite President like Buhari to stop the incestuous forex romance initiated by Soludo with BDCs.

Sadly, the CBN Directors' racket of insider trading of the official dollars in their custody, may not be an unusual culture, as incidents of Naira recycling are also reportedly been investigated in some regional currency depots.

This unfortunate reality of dollar and Naira racketeering seems strangely akin to employing a goat to protect your yam harvest; therefore, it is no surprise that, CBN Directors who have become stupendously enriched by the existing self serving forex strategy, have solidly, silently rejected alternative suggestions for better management of the Naira exchange rate; evidently, these public officers are keenly motivated to voraciously sustain their selfish interest with effusive propaganda, which mischievously extol their concerted rape of the economy as best practice management.

SAVE THE NAIRA,SAVE NIGERIANS!!