CBN introduces FX verification portal to enable importers access dollars


Businesses operating in the country, which products and services are priced in foreign currencies are profiting from the continued slide in the value of the naira, Business Hallmark can report.

According to findings, businesses like hotels, real estate and schools, which charge their fees in dollars are daily smiling to the banks with the huge revenue from exchange rate surplus, while their counterparts whose products and services are denominated in naira reel from the negative impacts of the multiple exchange rates unification recently introduced by the new administration.

It would be recalled that the Central Bank of Nigeria (CBN) had on Wednesday, June 14, 2023, announced the unification of all segments of the foreign exchange (FX) market.

In a circular to all financial institutions, the apex bank said all FX windows had been collapsed into the investors and exporters (I&E) window.

Titled “Abolishment of segmentation,” it says, “All segments are now collapsed into the Investors and Exporters (I&E) window.

“Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks.

“Re-introduction of the “Willing Buyer, Willing Seller” model at the I&E Window. Operations in this window shall be guided by the extant circular on the establishment of the window, dated 21 April 2017 and referenced FM/DIR/CIR/GEN/08/007. All eligible transactions are permitted to access foreign exchange at this window.

“The operational rate for all government-related transactions shall be the weighted average rate of the preceding day’s executed transactions at the I&E window, calculated to two (2) decimal places.

“Proscription of trading limits on oversold FX positions with permission to hedge short positions with OTC futures. Limits on overbought positions shall be zero”, CBN’s Director of Financial Markets, Angela Sere-Ejembi, had explained in the circular.

As a result of the decision to allow forex rates to freely float at the I&E window, the nation’s currency, the naira, started a free fall from the average of N430 it was officially sold in May and early June.

At the close of trading on Friday, August 4, 2023, naira appreciated by 4.31 percent to close at N743.07 to a dollar at the I&E window.

According to data from FMDQ Securities Exchange, a platform that oversees foreign exchange (FX) trading in Nigeria, the local currency hit an intra-day trading high of N799 and a low of N475 before closing at N743.07.

Meanwhile, foreign and local businesses that transact business in naira are daily declaring loses as the naira weakens, with the six biggest companies operating in the country posting $385 million losses at the end of second quarter of 2023.

Some of the businesses reaping from the continued crash in the value of the naira include top hotel brands like Sheraton, Radisson Collections, Marriott, Hilton, Best Western, Protea, Golden Tulip, Mantis Collection and Tsogo Sun Hotels and many others.

Others businesses reaping from the crash of the naira include educational institutions, especially international primary and secondary schools like the American International School Lagos, which charges $28,049 for middle school and $32,165 for high school; British International School, Lagos and Lekki British International School, Lagos.

Also on the lists are real estate firms that sell or rent out living and office accommodations to wealthy individuals and businesses.

BH investigation revealed that these businesses (FX priced) are now awash in tons of money after converting their FX to naira.

The administrator of one of the international schools based in Lagos, who begged for anonymity because he didn’t have the permission of the school management to speak on the matter, confided in our correspondent that business is booming for the institution.

“Though, we vacated two weeks ago to resume on September 5, some newly admitted and returning have started paying their fees.

“As you know, most schools normally do renovation works in preparation for the next academic session, which come at a huge cost.

“Unlike before when we found it a bit hard to raise enough funds to complete these projects, we are flushed with surplus naira from the differentials in the sales of earned FX.

“Owing to stiff company policy, we don’t patronise the black market, but deal with our bankers for our naira and FX needs.

“As a result, the best deal we got before the FX unification policy was about N610 for $1. The dollar today is selling to close to N800. That means we now earn extra N150 to N180 on every dollar. On every $1million, that is an extra N150 million to N180million naira income”, the school administrator said.

He also disclosed that apart from now having enough naira to complete many projects in the school, the wages of its staff are being enhanced.

“We lost several staff, especially teachers, to the ‘Japa’ syndrome. Up till now, we have not been able to replace some of them.

“Meanwhile, others have announced their intention to leave. But thankfully, we are in a better position financially to renegotiate with our workers.

“For instance, our least paid teacher now earn between N960,000 to N1.05million monthly, up from the old salary of N500,000.

“Some of those, who had earlier indicated that they would be leaving at the end of July have signified their desire to stay back after their salaries were reviewed.

“With more funds available from forex sales differentials, we have also started to recruit personnel from African countries in preparation for the new calendar year.

“This didn’t start today. It started a long time ago when the Europeans and Americans were foolishly looking for the elusive dollar. We never bothered looking for FX, we just look for things to buy locally with our trapped funds, which are very useful at home (China)”, Chan noted.

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