Ex-CBN Head, Obadiah Mailafia, Criticises Godwin Emefiele's Decision to Ban BDC Operators From Selling Forex
- The former deputy governor of the Central Bank of Nigeria, Obadiah Mailafia, says the apex bank is wrong to make lenders sole sellers of forex
- Mailafia said the bureau de change operators shouldn't have been banned as it will make banks take advantage of customers
- The financial expert states that banks are leopards and have a culture of round-tripping, which will limit the availability of forex
Obadiah Mailafia, a former deputy governor of the Central Bank of Nigeria (CBN), has criticised the decision of the apex bank to stop providing foreign exchange to bureau de change operators.
The governor of the CBN, Godwin Emefiele, had stated that only the commercial banks will now sell directly to customers, complementing the Investors and Exporters window.
However, Mailafia said the decision could weaken the value of naira against the dollars and other foreign currencies, as there might be a scarcity of forex.
Source: Getty Images
Why Mailafia is against CBN decision
With his experience of the banking system in Nigeria, Mailafia said the banks might hoard forex for themselves and sell at a high cost to buyers whenever the lenders want.
Emefiele said the bureau de change operators are now assisting corrupt people in their money laundering activities, hence the reason for excluding the BDC from forex channels.
But Mailafia said the same banks that the CBN wants to depend on are known for round-tripping, which means the forex will be made available by banks to companies they have an unknown link with.
Mailafai puncture holes in Emefiele's decision
According to the former deputy governor of CBN, he stated that removing BDC operators from the forex channels will worsen the queue that banks have been known for.
He also stated that the CBN didn't announce the rate at which banks are expected to provide dollars, euros, and foreign currencies, and it might lead to the lenders profiteering from forex sales.
He described banks as leopards, stating that:
“If we are not careful, that decision will actually worsen the naira value because the BDCs, you could walk into any of them anywhere and within five minutes, they will attend to you but the banks, you have to drive to your nearest bank, you have to queue most of the time.
“The CBN has not told us the rate, the banks will want to make a profit over the official rate, we don’t know whether they will make a decent profit or they will profiteer."
CBN to launch cryptocurrency for Nigerian market
Before the end of the year, Nigerians will have their own government-backed digital currency amid restrictions placed on bitcoin and other popular cryptos.
The Central Bank of Nigeria is reportedly working on launching the virtual currency by October. The apex bank stated that Nigerians will have access to it like naira.
The financial regulator has already made it known that it will not allow Nigerian commercial banks to have accounts linked to bitcoin.
Source: Legit.ng
