Hard days ahead as CBN insists on forex restrictions

In from Ali Smart . . . .
Hard times may yet be the lot of Nigerians in the coming year 2016, as the bite on the nation’s economy may be harder on individuals and businesses, going by the forex policy of the Central Bank of Nigeria (CBN).

Hope that the apex bank would rescind its decision on the controversial forex restrictions anytime soon, appears slim as the it says it is going ahead with the policy until further notice.

Speaking with journalists in Abuja over the weekend, the CBN’s Director, Monetary Policy Department of the apex bank Mr. Moses Tule said the foreign currency restrictions will be lifted “as soon as the country shore up its reserves to $50 billion, $60 billion $70 billion, $200 billion or more.

“The moment we begin to build reserves we expect that just as this restrictions were not there most of the restrictions will be lifted but for now every hand needs to be on deck, we need to earn foreign exchange, as a country you can improve your business processes in order to export and earn foreign exchange and that is what the country is calling on patriotic Nigerian businessmen to do.”

Shedding more light on the reason for the forex restrictions, Tule stated that “the currency of use in this country is the Naira not the dollar, you cannot expect carrying out dollar transactions over the counter in an economy whose currency is not dollar denominated we must learn to respect our systems and laws that govern our system.”

The law he said clearly states that “your deposits are in Naira, if you have a domiciliary account the proceeds if it is earned outside the country you can receive foreign currency deposits into it or if you have earned foreign currency those foreign currency can be deposited in that account I don’t see you carrying out a transaction and earning foreign currency within Nigeria you will earn Naira if you had a business that earned foreign currency it will come into your domiciliary account by way of transfer it is not going to come into your account by way of cash if you have got cash deposit in your domiciliary account there are only two ways about it, a) either you’ve patronized the black market or your doing some short changing and that’s against the law, the CBN would not like to sit and watch our people using the legitimate channels of the financial system to promote illegality.”

Read also: ABCON protests CBN’s BVN for forex transactions order

The CBN boss who cleared the air on debit card restrictions by the deposit money banks, said: “The limitations on the use of debit or credit cards outside the country was not a limitation that was placed by the CBN. They were restrictions that Deposit Money Banks (DMBs) placed because they have to settle whatever transactions you make with your debit cards with their corresponding banks in foreign currency and if the banks do not have the foreign currency to do that then you create a liability on them which will crystallise on their balance sheets.”

While the CBN empathises with Nigerians over the adverse effects of the forex embargo, Tule said: “At this point we are in in this country, the obvious answer is that the CBN cannot stop what the banks are doing now and the reason is very obvious. Our priorities as a nation for the allocation or use of foreign exchange is 1) for the settlement of matured letters of Credit that have been opened for importation; 2) for the importation of petroleum products until such a time either when we have our refineries fully operational and we are not in a position to import fuel again to ensure that the wheels of economic development continue turning and running and 3) for the importation of raw materials.”

The CBN director added that “whatever decisions banks take with respect to allowing their customers use debit cards overseas, those are strictly business decisions, they are looking at their balance sheets, they are looking at their capacity to settle with their corresponding banks the obligations that will crystallise on their balance sheets, rather than open themselves to the people who are out their shopping in foreign currencies using their debit cards for one thing or another.”

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