The Central Bank of Nigeria (CBN) has declared that it can block the accounts of manufacturers and other businesses in Nigeria and declare them as economic saboteurs simply for trying to access foreign exchange (FX) through the black market.
Speaking in a virtual meeting seen by MoneyCentral Godwin Emefiele CBN Governor, speaking with a group of CEOs of major businesses in Nigeria, said the bank has the powers legally to block all erring accounts.
“This includes the accounts of the owners and management of the companies,” Emefiele said.
“If you want to do your transactions, if you can’t find in CBN, go to the Investors and exporters (I & E) window. We will try as much as possible to make that market liquid. Don’t speculate, don’t go to the parallel market because we are seeing your transactions.”
The I & E window has largely been illiquid however contrary to the CBN claims as value traded averaged only $22 million per day last week, according to data compiled by MoneyCentral.
The CBN for its part has been unable to meet demand for dollars despite a devaluation of the naira to $1/N360 as collapsing oil prices puts pressure on its ability to accrete dollar reserves.
Emefiele asked the firms to be patient that their transactions will be filled.
There is no need to panic and go to the parallel market which is illegal, he said.
“Don’t go into illegal business, do your business legally and make your money. I repeat and I know some of you are involved. Stop now, by you going to buy in the black market, you are helping to overheat that market. Not only that you will lose money, because you would have bought at a price that is not realistic, I can tell you that you are going to lose money. We are seeing your accounts already, but we are appealing to you please stop, and let’s do what is right, what is legal, so that Nigeria can continue to be a good place for you to do business,” Emefiele said.
The CBN Governor said the apex bank had taken note of some of what businesses need, and nothing will stop FX forwards already committed to.
“We are going to provide more liquidity to the market so that people can stop going to the parallel market. Don’t go there, it is not good for you. Be patient, it is going to be orderly. If you can source your FX from abroad go ahead and source and do your business, at the appropriate time when your maturities are due, you will be able to take your money out.
There is no change in the terms of those forwards because they are already committed. Like I said, I am going to go back and check to ensure that all your forwards are expedited. I am trying to see that there is no need for you to panic, and I am happy for us to speak time to time. We are seeing some of those transactions, that is why I thought I should call you guys. Don’t overheat the foreign exchange market, by sounding desperate and going about buying dollars at those exuberant prices,” Emefiele concluded.
Only a matter of time will tell if the CBN Governor is bluffing or if it has the capacity to meet most dollar demand in a $400 billion economy haemorrhaging reserves.