Dollar subsidy is financial terrorism says LCCI

FELIX OLOYEDE|

Senate resolution that the Central Bank of Nigeria (CBN) should sell dollar to pilgrims going on private religious obligations at $/200 amounts to ‘financial terrorism’ and would lead to the erosion of confidence in the country’s foreign exchange market, the Lagos Chamber of Commerce and Industry (LCCI) has stated.

The senate had last week during plenary called on the Federal Government to mandate the apex bank to sell dollar to pilgrims at N200 for a dollar, but the CBN has reiterated that it will not sell forex to anybody at N200. “The lowest rate in the entire market is the inter-bank rate, which ranges between N305 to N315,” Mr Isaac Okoroafor told an online news medium.

Dr Vincent Nwani, LCCI’s Director, Research and Advocacy maintained that selling dollars to pilgrims at N200 would amount to gifting them over N100 for going for their personal business to serve God.

“That is financial terrorism on others. We have always talked about having a single exchange rate. At some point we had almost 11 exchange rates. We thought they had forgotten about that, the senate is now bringing this up again. Religion is a personal thing. We don’t see any reason why the state should be sponsoring personal relationship between a man and God. That is why I say it is sabotage on other Nigerians. So, it should be discouraged,” he asserted.

The naira lost -0.08 percent against the dollar on Friday to close at N366.37 at the Investors and Exporters window, stabled at $/305.8 and $/N366 at the interbank window and parallel market respectively.

The country’s currency has been stable and achieved at the parallel market and Investors and Exporters window convergence since the CBN introduced the Nigerian Autonomous Foreign Exchange (NAFEX) window in April, having hit all-time high of N525 for a dollar in February.

The economy has been grappling with dollar scarcity due to a sharp decline in crude prices which dipped from an all time record high of S114 per barrel in July 2014 to below S27 per barrel in January 2017, which was weakest since 2003. Nigeria earns 90 per cent of its foreign exchange from crude oil sales. This was made worse by militancy in the oil rich Niger-Delta, which crippled oil production.

Dr Boniface Chizea, Managing Consultant, BIC Consulting Services Limited argued it was wrong for government to subsidize pilgrimage.  “Religion should be a personal relationship between you and God. People should be able to fund their way to pilgrimage. If the official rate is $/N306, how can you sell to pilgrims at $/N200? How can you stop people from collecting for pilgrimage and diverting it to other uses?” he quizzed.

“It negates the call for rates harmonization in the market. I don’t think the CBN has the reserves to be able to sell dollars at N200. If there is stability in the market, the CBN could sell to pilgrims at the official rate,” said Mallam Aminu Gwadabe, President of the Association of Bureau de Change Operators of Nigeria (ABCON) in a telephone conversation with Business Hallmark.

The apex bank started aggressive intervention in the forex market in February and has so far injected almost $8 billion into the market. Forex inflow into NAFEX has skimmed over $3.8 billion since its introduction in April.

The country foreign reserves stood at $30.49 billion on July 19, according to data obtained from the CBN’s official website.

Contrary to misgivings in some circles a number of analyst including Dr Biodun Adedipe, Chief Consultant of Biodun Adedipe Associates Limited, believe that the CBN has the capacity to sustain its interventions in the forex market despite the pressure on the reserves.

He explained that on a 30-day moving average basis, foreign reserves have risen from $29.07 billion at end of 2015 to $30.36 billion by July 11 and the liquid portion of the reserves stood at $29.62 billion, which translates to 12.31 months of import cover.