The Central Bank of Nigeria (CBN) has attributed the crash of the naira against the dollar and its inability to manage the foreign exchange market to the diversion of diaspora remittances to the unofficial markets.
This was made known by the acting governor of the CBN, Folashodun Shonubi, while delivering a distinguished personality lecture titled “Diaspora Remittances and Nigeria Economic Development” for members of the Executive Intelligence Management Course (EIMC) 16 at the National Institute for Security Studies, Abuja.
The exchange rate between the naira and dollar closed a tumultuous week quoting for as high as N955/$1 on the black market.
Shonubi explained that many diaspora remittances came to Nigeria in dollars and were not documented officially, as they end up in the parallel market. Diaspora remittances are not in the official system.
Shonubi said: “With those remittances, the dollars have come in; we know the dollars have come in but we don’t see them in the official system. So, they must be going somewhere and somewhere.
“And the challenge with the black market, unofficial market or parallel market or whatever name you want to call it, it is as a result that it is not regulated, and it becomes an easy place to have criminal activities.”
He noted that it would be helpful if Nigeria puts measures in place to control illegal remittances and identify the channels to ensure remittance flows into the proper channels, and harness maximum benefits to grow the economy.
The CBN boss said the number of inflows coming through many unapproved channels and eventually ending up in the parallel market contributed significantly to Nigeria’s foreign exchange (FX) crisis.
“Today, someone called me privately and said this thing (naira) has gone up to some levels in the black markets. My question was, what do you want me to do? Do I operate in the black market? I don’t know the basis of pricing in the black markets.
“The other thing people don’t realize is that, because you don’t have full information, and I will give you an example since we started I&E window. We found out that some people would deliberately wait until the last minute and do one transaction of $5,000 and that becomes the closing rate,” he said.
