Nigeria Declares War on FX Speculators as Naira Drops to N1,830/$

Nigeria’s federal government on Tuesday, has declared war on currency speculation in its effort to stem the crisis in the foreign exchange (FX) market. 

The government issued a directive to the Office of the National Security Adviser (ONSA) and Central Bank of Nigeria (CBN) to join forces to address the challenges posed to the national economy by the speculative FX activities.

Equally, on Tuesday in a renewed bid to safeguard Nigeria’s FX market and combat speculative activities, the government deployed the Nigeria Police, Economic and Financial Crimes Commission (EFCC), Nigeria Customs Service (NCS), and Nigerian Financial Intelligence Unit (NFIU) to fight the menace.

The fresh measures came as the naira sustained its free fall at the parallel segment of the FX market, dropping to a record N1,830 to a dollar, a slide by N335 in just one week, compared to the N1,495 to a dollar it closed on February 13.

But President Bola Tinubu on Tuesday disclosed a plan by the federal government to raise at least $10 billion in order to increase FX liquidity, a key ingredient to stabilise the naira and grow the economy.

The naira, in one week, recorded its highest slump on the parallel market as it closed at N1,830/$ on Tuesday, while on the Nigerian Autonomous Foreign Exchange (NAFEM) it closed at N1,551.24/$1, a N47.3 appreciation compared to the N1,598.54 it closed on Monday.

However, speaking on Tuesday in Abuja, at the inaugural Public Wealth Management Conference, with the theme, “Championing Nigeria’s Economic Prosperity,” organised by the Ministry of Finance Incorporated (MOFI), Tinubu said his administration would create millions of jobs by unlocking the value of Nigeria’s vast public assets with a view to optimising and doubling the country’s Gross Domestic Product (GDP).

The president, who was represented at the event by Vice President Kashim Shettima, highlighted a low-hanging fruit of identifying, consolidating, and maximising returns on government-owned assets worth trillions of naira.

According to him, with economic revitalisation as its top priority, the federal government has a target of raising at least $10 billion in order to increase foreign exchange liquidity that will, in turn, stabilise the naira.

Tinubu said, “The federal government set a goal to raise at least $10 billion in order to increase foreign exchange liquidity, a key ingredient to stabilise the naira and grow the economy.

“At the core of this is ensuring optimal management of the assets and investments of the federal government towards unlocking their revenue potential.

“This includes our bold and achievable plan to double the GDP growth rate and significantly increase the GDP base over the next eight years.”

The president stated that decades of mismanagement and underutilisation had plagued the country’s assets spread across Nigeria and outside the borders, leading to revenue losses that have hindered economic growth.

He assured that the newly restructured Ministry of Finance Incorporated, designed to act as custodian and active manager of the assets, would now take centre stage.

The president further emphasised transparency and accountability as key principles, believing that improved corporate governance, innovative partnerships, and attracting alternative investment capital will significantly increase returns.

He said the improved returns would, then, be directed towards, “crucial funding for education, healthcare, housing, power, roads and other areas vital to lifting millions out of poverty”, and stimulating sustainable economic development and job creation for the youth.

Stressing that the initiative was not just about revenue generation, but also creating inclusive and sustainable growth, Tinubu said by efficiently managing public resources, the government aimed to build a more equitable society and unlock the full potential of its citizens.

He called on all stakeholders, including ministries, development financial institutions, and both public and private sector players, to partner with MOFI in optimising the strategic assets. He expressed hope that the collaborative effort would unlock Nigeria’s full potential and create a brighter future for all citizens.

Nonetheless, Shettima alleged that certain unnamed individuals, who could not get to power through the ballot box, were hell-bent on plunging the country into a state of anarchy instead of waiting to have another attempt in 2027.

The vice president said, “I do believe that harnessing our vast assets ultimately boosts economic prosperity for all. We are passing through some rough waters, but when there is a will, there is a way.

“We know the consequences of unveiling a masquerade but we have to make this country work. We have to move beyond politics. We are now in the phase of governance.

“Sadly, some of our countrymen are still in the political mode. They are the practitioners of violence advocating that our country should go the Venezuela way. Some are agitating that we should go the Lebanon way.

“But Nigeria is greater than any one of us here. Nigeria will weather the storm.”

Shettima highlighted some steps taken by the current administration to improve economic activities.

He stated, “In the first month after coming on board, our revenue for sharing at FAAC was N1.9 trillion.

“In order not to overheat the polity of the economy, we had to warehouse N1 trillion and share N900 billion.

“We are not altogether in a very terrible retard shape. Yes, there’s the FX challenge, which all hands are on deck to see that we weather that storm. As I said, we know the consequences of unveiling the masquerade.

“Forces are hell-bent on plunging this country into a state of anarchy. Those who could not get into power with the ballot box, instead for them to wait till 2027, they are so desperate.

“If this country can fall apart, as far as they are concerned, so be it. But we are going to be resisting them.

“Just a few nights ago, 45 trucks of maize were caught being transported to a neighbouring country. Just in that Ilela axis in Sokoto State, there are 32 illegal smuggling routes.

“And the moment those foodstuffs were intercepted, the price of maize came down by N10, 000. It came down from N60, 000 to N50, 000.

“So, there are forces that are hell-bent on undermining our nation, but this is the time for us to coalesce into a singular entity. I have only a Nigerian passport. I don’t have a Moroccan wife or a house in Dubai and we would do everything to make things work for our nation.”

Earlier, Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, said Tinubu was mindful of the pains of his administration’s reform programmes and was deploying appropriate mechanisms to address the challenges.

Edun assured that while 42,000 metric tons of assorted grains were being released, with 60,000 metric tons to follow, shortly, as part of measures to arrest food inflation, food prices would drop in the coming months as a result of government’s actions and policies.

The minister urged the management and board of MOFI to, among other things, develop a specific line of revenue for the national budget as part of its renewed mandate of supporting the federal government’s fiscal stability.

Chairman of the MOFI Board, Dr. Shamsudeen Usman, assured that the agency would, going forward, play a more active role in the management of assets under its purview. Usman urged operators of the assets to see MOFI as a partner rather than competitor or regulator.

Stating that the new management was committed to high level corporate governance, Usman disclosed that the company had integrated a non-conflict of interest policy to guard against practices that undermine professionalism among members of staff.

On his part, Chief Executive Officer (CEO) of MOFI, Dr. Armstrong Takang, gave an overview of the MOFI renewed mandate, particularly highlighting expectations from the public and the private sector.

Takang also announced the launch of a N100 billion Project Preparation Fund by MOFI as part of its renewed mandate of ensuring professionalism in the management of public assets.

According to him, the overall objective is to deliver commercial value for the common good of the people. He assured that the company would transform the fortunes of public assets under its purview and restore investors’ confidence in both the operation and management of the assets.

Meanwhile, in a renewed bid to safeguard Nigeria’s foreign exchange market and combat speculative activities, ONSA and CBN are joining forces to address challenges posed to the nation’s economic stability.

ONSA stated that CBN’s proactive measures to stabilise the FX market and stimulate economic activities had been commendable.

It stated, “However, the effectiveness of these initiatives is being undermined by the activities of speculators, both domestic and international, operating through various channels, thereby exacerbating the depreciation of the Nigerian naira and contributing to inflation and economic instability.”

ONSA said in a bid to address the exchange rate volatility, CBN initiated a comprehensive strategy to enhance liquidity in the forex market, including unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for Bureau De Change operators, enforcing the Net Open Position limit for commercial banks, and adjusting the remunerable Standing Deposit Facility cap.

A statement signed by Head, Strategic Communication, Office of the National Security Adviser, Zakari U. Mijinyawa, disclosed, “To reduce the pressure on the naira, the Economic and Financial Crimes Commission (EFCC) has raised a 7,000-man special task force across its 14 zonal commands to clamp down on dollar racketeers.

“Yet, recent intelligence reports have highlighted continued illicit activities within the Nigerian foreign exchange market. The ONSA and CBN are, therefore, embarking on this collaborative approach to tackle these infractions.”

It said the partnership would involve a coordinated effort with key law enforcement agencies, including the Nigeria Police, EFCC, Nigeria Customs Service, and NFIU.

The statement said, “The primary objective of this alliance is to systematically identify, thoroughly investigate and appropriately penalise individuals and organisations involved in wrongful activities within the FX market.

“By leveraging the expertise of these agencies, we aim to deter malicious practices, protect investor interests, and promote sustainable economic growth.”

The statement also said, “This joint effort underscores the commitment of the Nigerian government to improving its Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) framework and exiting the grey list of the Financial Action Task Force.

“In addition, the efforts will make progress in ensuring a stable and transparent foreign exchange market, fostering investor confidence, and advancing the nation’s economic well-being.”

In his presentation on the private sector perspective on public assets, Chairman of Heirs Holdings, Mr. Tony Elumelu, urged MOFI to fashion its operations after Temasek of Singapore, which he said had become a global model for efficiency and performance.

Elumelu stated that Temasek also actively managed its investments, engaging with portfolio companies to drive growth and value creation. He said they were not a passive investor that sat back, but were more like a private equity firm that worked closely with management to unlock value.

“We need this approach in Nigeria,” he said.

Elumelu also said while MOFI was established in 1959, Temasek was created in 1974. He added that the latter was set up with state-owned assets worth $300 million, which were now worth approximately $300 billion.

Stating that it was gratifying that after over six wasted decades, MOFI had entered a reformation era, Elumelu urged the board and management to embrace a value creation mind-set.

He explained that setting a strategic intent of the institution was critical. He also underscored the need for strong corporate governance.

Citing the turnaround success in the Heirs Holdings Group, Elumelu stated that it boasted expertise in unlocking the value in assets.

NACCIMA Writes CBN Governor, Minister of Trade, Proffers Strategies to Address Naira Slide, Inflationary Pressure

National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dele Kelvin Oye, proffered short, medium and long-term strategies to address the naira depreciation and inflation surge, and ensure economic prosperity for the country.

In separate letters to Governor of CBN, Mr. Olayemi Cardoso, and Minister of Industry, Trade and Investment, Doris Nkiruka Uzoka-Anite, the NACCIMA boss charged CBN to immediately announce the pegging of the naira to between N750 and N850/$ effective from March 21, 2024, and enforce stricter regulations on currency transactions.

In the letter to Cardoso, titled, “NACCIMA’s Suggestions for Addressing the Continuous Depreciation of our Currency,” Oye outlined a multifaceted plan, segmented into short, medium, and long-term measures to address currency devaluation and inflation in the country.

According to him, “This letter embodies the thoughts of the organised private sector on how we can tackle the lingering challenge of the naira’s depreciation.

“It is our hope that you and your team can consider the ideas espoused here, and by implementing them, achieve significant progress in stemming the ugly tide of currency depreciation that currently bedevils the nation.”

In the short term, Oye outlined enforcement of currency regulations, transparent communication, official transactions, remittance oversight, as well as monitoring and compliance as necessary in addressing the challenges.

He said, “The CBN should immediately announce the pegging of the naira to between N750 to N850/$ effective from March 21, 2024, and enforce stricter regulations on currency transactions.

“This includes hefty fines, prosecution of breach of laws, and confiscation of funds involved in transactions that violate a specified exchange rate band, such as the 15 per cent maximum difference from the official rate.

“The government should consistently communicate its policy intentions and economic measures to the public to strengthen confidence in the nation’s economic management.

“All government agencies, at every level, should be mandated to conduct their transactions at the official rate, and severe penalties should be imposed for violations.

“On no account should government money go to the parallel market, directly or indirectly (through its contractors or government agents) without a certificate issued by the CBN or the Independent Emergency Economic Intelligence Committee.

“Any transaction above a certain threshold (to be fixed by the CBN every 90 days) must be backed by an undertaking by the financial institution/to pay the penalty of at least double the size of transaction if the facts used for seeking the approval subsequently becomes inaccurate.”

Oye also advised CBN to, “Strengthen the monitoring of financial institutions and enforce compliance with foreign exchange regulations. This would involve using the banking system to monitor and regulate the flow of foreign exchange in and out of the parallel market.

“Remittance Oversight: Implement policies to ensure that inflows from remittances are properly channelled through the official banking system and are used to support the naira.”

For the medium term measures, the NACCIMA boss advocated diversification initiatives, financial literacy and inclusion, investment in infrastructure, support for small and medium enterprises (SMEs) and inflation targeting, among others.

According to him, there is need to, “Invest in and promote non-oil sectors to increase exports and reduce reliance on oil revenues. Sectors, such as agriculture, manufacturing, and services should be the focus of targeted policy support.

“Enhance financial literacy to encourage the use of official financial channels and discourage reliance on the parallel market.

“Invest in infrastructure to reduce the cost of doing business and make Nigerian exports more competitive, provide incentives and easier access to finance for SMEs to boost local production and exports and implement a clear inflation targeting framework to guide monetary policy, aimed at achieving price stability.”

On long term strategies to address the challenges, Oye charged CBN to, “Maintain consistency in economic policies to foster a stable environment for investment and economic planning.

“Build the capacity of economic institutions to effectively regulate and supervise the financial sector and enforce laws against economic sabotage.

“Undertake structural reforms to improve the business environment, such as streamlining business registration, enforcing contracts, and simplifying tax systems.

“Invest in education and healthcare to improve labour productivity and the innovation potential, and work towards increasing foreign reserves to buffer against external shocks, which can be achieved by improving trade balances and attracting foreign investment.”

In his letter to the trade minister titled, ‘Strategic actions to mitigate hyperinflation and uphold local and international agreements in the wake of naira devaluation,” Oye said Nigeria was at a crossroads where the convergence of economic prowess and policy prudence must be harnessed to ensure the well-being of the economy, stability of the naira, and prosperity of the people.

According to him, “The recent precipitous devaluation of the naira has triggered hyperinflation, undermining both the citizenry and the business community. This situation has, in effect, breached the implicit contract between the Nigerian government and its people, wherein the government is entrusted with the stewardship of policies that safeguard against such economic volatility.m

“The Ministry of Investment, Trade, and Industry, as a custodian of economic guidance and a sentinel against policy discordance, plays a critical role in steering the federal government towards adherence to local and international financial and trade agreements.

“It is imperative that the policies enacted by the government do not frustrate the ability of private businesses in Nigeria to keep contractual agreements with their business partners. Also, that our government’s commitment with local businesses, bilateral/multilateral Institutions, the ECOWAS, the African Continental Free Trade Area (AfCFTA), and the World Trade Organisation (WTO) agreements, amongst others, are not contravened by federal government policies.”

Deji Elumoye, Ndubuisi Francis, Kingsley Nwezeh and Nume Ekeghe 

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