The International Monetary Fund (IMF) has called on the Federal Government to be more transparent with the restrictions imposed on foreign exchange by the Central Bank of Nigeria (CBN), saying it is posing some challenges to member countries.
Similarly, the Association of Senior of Banks, Insurance and Financial Institutions (ASSBIFI), while lauding the decision of the CBN to stop the sales of forex to Bureau De Change (BDC) operators, said there is the need, however, for the apex bank to effectively monitor the policy in order to ensure that it does create a deeper forex crisis for the economy than intended to solve.
Ari Aisen, IMF resident representative to Nigeria, spoke in Abuja during a visit to the minister of industry, trade and investment, Richard Adebayo, on Friday.
According to Aisen, forex restrictions as imposed by the CBN does not go well with the IMF’s article of agreement, adding that over 190 countries signed to become members to avoid heavy trade restrictions of this sort.
The country representative said the IMF respects the sovereignty of Nigeria and its decision to take certain trade policies and restrictions which the fund may not agree with. He, however, said forex restrictions pose more challenges and if its imposition is necessary, must, therefore, be done in a transparent manner.
“We are aware of the programmes on import substitution, developing local industries and trade restrictions that go with it, mostly forex. In our articles of agreement, forex restrictions are not seen positively simply because over 190 countries signed to be members, to avoid heavy trade restrictions of this sort, vis-a-vis trade policies. We would not preclude or advise against it, even if as economists we would not agree. But, forex restrictions are a little bit more of a challenging issue, unless it is transparently communicated.
Also speaking in Lagos at a forum with Labour Writers Association of Nigeria (LAWAN), Oyinkan Olasanoye, president of ASSBIFI, lauded the CBN’s recent policy to halt sales of forex to BDCs and the decision to use only the commercial banks to sell to Nigerians in need of forex, describing it as a development long overdue.
She, however, cautioned on the need for tight implementation of this policy so as not to create scarcity and further weaken the naira.
“We commend the CBN for the recent ban on the sales of forex to BDCs. This is necessary because over time we are concerned that BDCs have allowed themselves to be used for graft. They have turned themselves away from their objectives.
“However, we are concerned over the implementation. As we all know that one of the problems we have in this country is policy inconsistency.
“This is because if care is not taken, some BDCs will still be operating illegally, hence, there won’t be adequate control. And this may lead to scarcity of forex.
“If this happens, it would create some challenges in the market as commercial banks might not be able to meet the forex demands of importers and this can negatively affect the forex trading market,” Olasanoye said.
Meanwhile, the minister of trade industry, trade and investment, Adebayo while responding to the IMF’s concerns, said even though Nigeria is a signatory to non-trade restrictions, it is not the wish or intention of the country to restrict trade or forex.
According to him, forex restriction is as a result of Nigeria’s peculiar problem with regards to forex generation; but assured that the Nigerian government is working to address the problems
“We are doing a lot to diversify our source of FX in terms of encouraging exports of other commodities other than oil and gas so that we can improve FX generation.
“We have been at the forefront, facilitating meetings between companies and CBN, so that the bank can explain to them what the situation is, with the promise that once there’s an improvement in our forex generation, it will be made available to them. So, we have been playing that role”, he said.