Remember Hugh Masekela? If you don’t, then you probably remember “The Boy’s Doing It,” his pulsating hit tune that got us dancing—or at least savouring his dexterity on the trumpet. in the 70s.
Wikipedia presents him as a South African trumpeter, flugelhornist, cornetist, singer, and composer and describes him as the “father of South African jazz. known for his jazz compositions and for writing well-known anti-apartheid songs.”
Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), is one of those fondly, and sometimes derogatively, referred to as Tinubu’s Boys, on account of having served as Commissioner for Economic Planning and Budget during Tinubu’s tenure as Lagos State Governor from 1999 to 2005. In that capacity, he implemented the blueprint that catalysed economic development in the state and championed reform, pioneering state-of-the-art analytical and consultative mechanisms for improving governance.
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Contrary to then-President Obasanjo’s expectations, Lagos did not shake. There would be no crime in reserving some kudos for Yemi for the resilience that Lagos displayed in weathering the storm.
With the president under pressure since his inauguration last May, his critics have challenged him to reproduce the magic that enabled him to stand up to President Olusegun, who withheld Lagos’ mandatory federation revenue share over his creation of local government areas without, according to Obasanjo, following the due process spelled out in the Constitution.
That’s the challenge that Mr. Cardoso has again to meet in the current dire economic situation, vis-à-vis monetary turbulence, that the country is reeling in. How pleased is Tinubu with his response?
This is where Hugh Ramapolo Masekela freely borrows his words: “The Boy is Doing It.”
On March 1, 2024, CBN announced the revocation of the operational licences of 4,173 Bureaus de Change (BDCs). The bank has released guidelines aimed at strengthening the regulation of their operations, including an increase in capital requirements. The currency market has witnessed so much volatility in recent times, and the naira has since depreciated by over 60 percent at the Nigerian Autonomous Foreign Exchange Market (NAFEM), also known as the official market. The currency has also plunged by 50 percent on the streets, otherwise known as the black market.
Kelvin Emmanuel, director of Obsidian Archenar Nigeria, said that the revised regulatory guidelines are a masterstroke from Cardoso. He said that regulating BDCs is a key step in fighting illicit financial flows for terrorist financing in Nigeria.
“If these guidelines can be judiciously enforced without someone calling the Villa for a waiver, we will make headway with not just a semblance of stability in the FX market but also be removed from the grey list for AML/CFT by the Financial Action Task Force (FATF),” he said.
The CBN has proposed an increase in the minimum capital requirements for Bureau de Change (BDC) operators in the country to N2 billion and N500 million for Tier 1 and Tier 2 licences., a significant increase from the previous requirement of N35 million for a general licence.
“Tier 1 operators must maintain a minimum share capital of N2 billion and also submit a mandatory caution deposit of N200 million. In Tier 2, operators are required to possess a minimum share capital of N500 million and maintain a mandatory caution deposit of N50 million,” the CBN draft noted.
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In the 2002 and 2015 regulations, the allowance of private sources provided a gateway for money laundering and round-tripping of FX sourced in the official market. The Foreign Exchange Act of 1995 allowed for the nondisclosure of sources of any foreign currency to be sold in the market.
“Contrary to then-President Obasanjo’s expectations, Lagos did not shake. There would be no crime in reserving some kudos for Yemi for the resilience that Lagos displayed in weathering the storm.”
“Except as required under any enactment or law, a person executing a transaction in the market shall not be required and, if required, shall not be obliged, to disclose the source of any foreign currency to be sold in the market,” the Act states.
“No foreign currency imported under this Act shall be liable to seizure or forfeiture or to suffer any form of expropriation by the Federal or State Government except as provided under this Act,” the 1995 Foreign Exchange Act stated.
CBN listed sources from which BDCs can get FX, including tourists, returnees from the diaspora, international monetary transfer operators, and embassies, among a few others.
There are also restrictions on net open positions to stamp out speculation. This generally refers to the difference between the total amount of FX BDCs being held (bought) and the total amount sold (but not yet repurchased). The new system aims to eliminate any prior inconsistencies in cash availability by BDCs.
To enhance market transparency and promote effective price discovery, full digital integration with the Central Bank of Nigeria (CBN) will be a prerequisite for operating as a BDC within the foreign exchange market. This integration will provide the CBN with comprehensive, real-time insights into the volume and flow of transactions within the parallel market. Data on transaction origin and destination will improve regulatory oversight and support more accurate market valuations.
According to the proposal, all transactions by residents shall only commence after electronic retrieval of the potential customer’s BVN or Tax Identification Number (TIN) from the NIBSS or Federal Inland Revenue Service (FIRS) databases, respectively, and the details confirmed to match with the potential customer’s standard identification document.
The CBN’s leadership’s plans and actions appear to yield the desired results, as the Naira is fast gaining and stabilising against the dollar and other foreign currencies. And the public should note, “Construction is always difficult, but destruction is easy.” There are also “saboteurs” of the efforts of the CBN, whose actions appear hell bent to not only undermine the apex bank’s efforts but are capable of sinking the nation’s economy into an abyss if left unchecked. A classical example is Binance. But the CBN Governor, from all indications, appears quite resolute and has resisted all manner of pressure to ensure that the naira regains and maintains its deserved value while protecting the independence of the CBN as constitutionally enshrined in the CBN Act.
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Cardoso’s CBN holds on to its position that the naira is undervalued. Patriotic Nigerians should rise in support of Mr. Cardoso and the current CBN leadership to save the naira. Enough of the malicious attempts to discredit their efforts at rescuing the financial system in the country.
Instead of irreverent criticisms, the CBN Governor, Cardoso, must be sympathised with and, most importantly, supported and encouraged by all well-meaning Nigerians. He has inherited a lot of unpredictability and huge challenges—arguably the worst in Nigeria’s central banking administration. He and his team have, from day one, sincerely acknowledged the challenges and swung into action to deal with all of them with the required sense of determination, commitment, professionalism, and patriotism.
It is utterly unfair for anybody to accuse CBN of bigotry in its actions in dealing with the challenges before it. What is done is what is needed to deal with the myriad challenges, working with all the relevant stakeholders, whose membership cuts across the country.
As of yet, nobody can accuse CBN of going outside its mandate; indeed, the widely circulated circulars on the new guidelines for the BDC are in conformity with the CBN Act.
Cardoso is addressing the peculiar circumstances of Nigeria. In this regard, he’s not obliged to apply responses that may suit other countries but will not fly with Nigeria. Nigeria’s problems require solutions from within.
Before he joined the CBN, he spent over 29 years in commercial banking, culminating in his tenure as Chairman of Citibank Nigeria Ltd., a subsidiary of the world’s leading global bank and the oldest international bank in Nigeria, from 2010 to 2022. Between 1990 and 1997, he was an executive director at Citizens International Bank Limited and a principal partner at FBC Associates Limited from 1997 to 1999.
During his banking and public sector career, he served as Chairman of the Lagos Economic Summit Group (2020–2021) and the Africa Venture Philanthropy Alliance (AVPA), 2014–2020. He also served as a member of the Economic Advisory Council of the Federal Republic of Nigeria (2015–2019) and the Cities Alliance Think Tank (2015–2018). Other private sector positions held by Cardoso during his career include board membership of Chevron Oil Plc (2005–2008), Nigerian National Advisory Board for Impact Investing, Lagos Business School, Institution of the Annual State Economic Summit, Johnson Products, and DRASA Health Trust.
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Cardoso graduated from the University of Aston in Birmingham, United Kingdom, in 1980 with a Bachelor of Science in Managerial and Administrative Studies (Concentration in Finance and Accounting) and subsequently pursued his master’s in public administration and management (Concentration in Economics and Finance) from Harvard University, Massachusetts, United States of America, in 2005. Mr. Cardoso was conferred with a Doctorate in Business Administration (DBA) (honoris causa) by the University of Aston in Birmingham in 2017 in recognition of his outstanding achievements in the private and public sectors. He is also a Fellow of the Chartered Institute of Stockbrokers.
The measures he has proposed are intended to sanitise the forex sector for genuine investors, not for those, including operators of BDCs, commercial banks, manufacturers, importers, and other complicit characters, who use it for various types of illegalities and financial crimes.
Indeed, “The Boy’s Doing It.”
