The Central Bank of Nigeria (CBN), on Thursday, attributed continuous fall of Naira against dollars to present unofficial diaspora remittances.
The acting governor of the apex bank, Folashodun Shonubi, stated this at National Institute for Security Studies, Abuja where he delivered Distinguished Personality lecture titled: “Diaspora Remittances and Nigeria Economic Development” for members of Executive Intelligence Management Course (EIMC) 16.
Recall that the naira plunged to a record low of N925/$1 on the parallel market on Wednesday as demand for foreign currency outstripped supply.
This is the aftermath of liberalising the foreign exchange regime, which is a clear departure of what obtained during the President Muhammadu Buhari- led administration.
But Shonubi explained that many diaspora remittances came to Nigeria in dollars and they were not recorded officially, as such found their ways to black or parallel markets.
“With those remittances, the dollars have come in, we know the dollars have come in but we don’t see them in the official system. So, they must be going somewhere and somewhere.”
“And the challenge with the black market, unofficial market or parallel market or whatever name you want to call it, it is as a result that it is not regulated, and it becomes an easy place to have criminal activities.
“We investigate bankers, not just bankers, anybody who has committed an offence, the first thing they want to do is to run to the black markets, change it to the dollars because it is less money to carry around.
“Some of the funding in the black markets are actually from diaspora remittances. That’s why it important we need to know a lot of what’s going on there. We can’t play the sentiment game. If we don’t understand the dynamics, we usually go with the literature which does not necessarily work for us,” the top banker said.
He noted that many countries have remittances as the major source of dollars or income saying that, “we have countries that earn about 1.5 million dollars in remittances. Everywhere, any place you go even in developed countries such as India, China among others.”
According to him, it would be helpful if in the country, measures can be put in place to control illegal remittances and identify these channels so as to ensure remittance flows into the proper channels, and harness maximum benefits to grow the economy.
He said the country had an increase in diaspora remittances almost than it got from construction industry in 2021, adding that many Nigerians in diaspora don’t want to always come back home unless they are forced
“We intend to use more of the banking system to, sending money to Sub-Saharan Africa cost highest because we don’t have masses. It would be helpful if we can work together to identify these channels because we just want the flows into the proper channels, there we can get maximum benefits to grow the economy.
“We talk about black markets, that also creates its own problems. Management of foreign exchange market and the efficacy of our policies to manage the exchange rate becomes difficult due to the insignificance of our diaspora remittances which are going to other markets.
“Today, someone called me privately that and said this thing (Naira) has gone up to some levels in the black markets, my question was, what do you want me to do? Do I operate in the black markets? I don’t know the basis of pricing in the black markets.
“The other thing people don’t realise is that, because you don’t have full information, and I will give you an example since we started I&E window. We found out that some people would deliberately wait to the last minute and do one transaction of $5,000 and that becomes the closing rate.
“We can’t do without diaspora remittances. For many countries, that’s their main source of income.”