On Thursday, the Central Bank of Nigeria (CBN), attributed the continuous fall of the Naira against dollars to present unofficial diaspora remittances.
The acting CBN, Folashodun Shonubi, stated this at the National Institute for Security Studies, Abuja, where he delivered a Distinguished Personality lecture titled “Diaspora Remittances and Nigeria Economic Development” for members of the Executive Intelligence Management Course (EIMC) 16.
REPORTERS AT LARGE had reported that the naira plunged to a record low of N900/$1 on the parallel market on Wednesday as demand for foreign currency outstripped supply.
This is the aftermath of liberalising the foreign exchange regime, a clear departure from what was obtained during the President Muhammadu Buhari-led administration.
But Shonubi explained that many diaspora remittances came to Nigeria in dollars and were not recorded officially, as such found their way 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 is 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, identify these channels 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 more than it got from the 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 too, sending money to Sub-Saharan Africa cost the 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, which also create problems. Management of the 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 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 the I&E window. We found out that some people would deliberately wait until 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.”
