The Nigerian government has revived the
80s foreign exchange market system; a hallmark of the Babangida economy.
The Central Bank of Nigeria, CBN,
challenged with a contracting economy headed to recession, in a partial
announcement yesterday introduced the new policy of a flexible
exchange rate regime to make foreign currencies more accessible,
Nigeria more attractive for investors and attempt to bring down the exchange
rate in the parallel market.
While the CBN nullified the
official exchange rate regime of N197/dollar, the apex bank failed to
absolutely devalue the market as advised by local and foreign experts including
ourselves, but opted to institute a flexible and multiple market
This model is identical to the second
tier foreign exchange market system (SFEM) Babangida used to replace his
predecessor, Buhari's austerity measures with limited forex allocations for
"essential commodities," as has again so-far been repeated by
Buhari for the first year of his second coming.
According to Godwin Emefiele,
the apex bank’s Monetary Policy Committee, MPC voted unanimously to
adopt the new SFEM model which will have two
(multiple) levels: a subsidized level (presumably still the N197 rate) and a
government officiated flexible level that responds to the market.
The decision is to “retain a small
window for funding critical transactions,” the central bank governor said.
First tier for masses, second tier for cabal?
While the governor has not yet listed
what the "critical transactions" are, it is easy to imagine that
these will once again be the businesses and ventures of Nigeria's cabal.
The central bank governor this
January promised Nigeria
oligopolist benefactor billionaire Aliko Dangote "unfettered" access
to "subsidized" dollars (official rate) for his private $14 billion
refinery. Will such private projects of cabal be considered "critical
transactions" and given subsidized dollars?
The masses have so far been deprived of
all exchange rate subsidy with their last benefit, PMS previously imported with
CBN N197 rate dollars, removed from essential or critical transactions and
thrown to the parallel market, now to become the second tier rate.
While small and medium enterprises, SMEs
are the largest employers of labour (providing over 70% of jobs), there has
been no access to preferred central bank dollars for small businesses. In the
last three months Nigeria lost
over 500,000 jobs due to the cabal/large industry
preferential, selective forex policy murder of the small and middle
With all illegal advantages given to
cabal including tax breaks, import waivers (with losses for Nigeria in the tune
of N447 billion as the Senate
just condemned), free land, gifting of assets, subsidized dollars and the
like, the cabal/big industry ends up selling finished product and service to
Nigeria at triple global cost averages: compare cement, mobile service,
internet domain registration, internet service and all other products and
utilities provided by the cabal.
As the central bank institutes SFEM, one
will again watch to see who gets the subsidized dollar level and who gets the
flexible market determined and determining second level.
I will not hold my breath.
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