CIBN backs Tinubu on exchange rate unification

The Chartered Institute of Bankers of Nigeria (CIBN) has commended President Bola Tinubu for unifying the Naira exchange rate to save the country from financial crisis. The President/ Chairman of Council of CIBN, Dr Ken Opara, said this at the 2023 Lagos Bankers Night with the theme, “Exchange Rate Unification: Global Implications, Organisation’s and the Country,” on Friday night in Lagos. According to him, the institute has always advocated transparency and a free market that would allow the interplay of supply and demand. He said, “The Chartered Institute of Bankers of Nigeria totally supports the Central Bank of Nigeria’s reform as it relates to the unification of the exchange rate and other measures basically taken to ensure the true value of the Naira. “As a matter of fact, we have been advocating for this and during the week, Dr ‘Biodun Adedipe, leading other scholars, and Mr Laoye Jaiyeola of the Nigeria Economic Summit Group, gathered at the Bankers House to applaud the reform, especially as it relates to the unification of the exchange rate. “We have seen that the effort that the Central Bank of Nigeria has initiated is already yielding dividend. “We can see that the exchange rate between the Naira and the dollar has started coming down which means it is a good initiative that is well thought out.” Opara said that the institute recently organised a half year economic review, where captains of industries also spoke in support of the reform. He urged Nigerians to take advantage of the good opportunities that the reform had presented, saying wherever there are challenges lie in opportunities. The CIBN president pledged the institutes continued commitment to making contributions and suggestions relating to what should be done to support and grow the country. He said, “As it is the concept of the industry; we played this role very well when the industry was facing challenges and we will continue to do that because we believe that the banking industry is very solid, stable and efficient.” He described the payment system in Nigeria as “the best” all over the world, stressing that it is a system that one could consummate transactions on an online real-time basis. Opara said this showed that the banking industry and its regulator had done well in stabilising what an effective payment system. He debunked media reports that its Lagos branch was not in support of the exchange rate unification, describing as “untrue”, but calculated to cause panic. Chief Consultant of B. Adedipe Associates Ltd. (BAA Consult), Dr ‘Biodun Adedipe, said that the exchange rate unification, which was not new in Nigeria, had gone through the route before with different appellations. “Let me trade very quickly what I brand as Nigeria’s journey to exchange rate unification. “Nigeria has gone through this route before but with different appellations like devaluation, correction, alignment, depreciation, all of which are matter of semantics. “The simple interpretation of this is to remove the premium on the official rate and the parallel market or road side market. “Of course, this is a typical Bretton Woods recipe; keep premium within five per cent to decentivise round tripping and then find liquidity to sustain it. “This is the easy way out; but, it never brings enduring solution to the persistent crisis in the external sector of the Nigerian economy.”. According to him, there are 54 evidence-based research documents to establish that free float is not always the most appropriate for all economics. Giving historical illustrations, the expert noted that exchange rate movements had a more significant impact on all other prices more than interest rates adjustment. He said the only period that Nigeria experienced a successful and stable rate convergence in the country was when it had a significant external reserve. Adedipe said it took the country an average of two to six weeks for the parallel market rates to diverge from the official exchange rate during each episode of premium removal. He added that speculative attack on the currency occured each time there was no clear sight to a stable and enduring supply. President Bola Tinubu, had during his inauguration on May 29, said his administration would seek to bring the different exchange rate regimes being operated across the country’s foreign exchange channels under a single regime. However, in June, Tinubu through the Special Adviser on Special Duties, Communications, and Strategy, Dele Alake, announced the implementation of a unified exchange rate to save the country from a financial crisis. He emphasised that his decision to implement a managed float, similar to his approach to fuel subsidy removal, was in the best interest of Nigeria.

Vehicle importation declines due to exchange rate unification, says ANLCA

The Association of Nigerian Licensed Customs Agents (ANLCA) on Saturday said that the floating of the nation’s currency has caused a drop in vehicle importation in the nation’s ports. The agents also said that vehicles imported into the country were trapped at the ports due to the rise in exchange rate which pushed up duties on vehicles. ANLCA Taskforce Chairman, Alhaji Rilwan Amuni, noted that the floating of the naira was inevitable because the government wanted a uniform rate. Amuni, however, urged the government to look into other levies paid at the ports. He told said that the challenges faced by customs agents at the ports were enormous because of the high dollar rate which hiked duties on vehicles to over 50 percent. “The job we used to do after the advent of the Vehicle Identification Number (VIN) in which we charged N1.4 million, is now like N2.2 million and this has resulted in vehicles being trapped in the ports. “Also, there has been a drop in importation because things are really biting hard,” he said. Amuni added that the development had affected goods already imported, noting that they had no choice but to clear at the current rate. He also urged the government to look into the levy placed on used goods, adding that they are proposing a dialogue with the Federal Government on ways to jettison this levy so that there would be a relief. “Some people are confusing the tax that was suspended recently with the issue of levy. It is not the levy that they removed, it’s the Import Adjustment Tax that was supposed to have started. “We are appealing to the government to remove the levy because what does a poor man derive when he buys a Corolla 2004 and pays duty and fine again? The only goods that are supposed to have a levy are luxury goods. “Maybe you are a big man and you want to ride a yacht or helicopter, that is what they are supposed to levy not on used goods,” he said. Also, ANLCA Secretary, TinCan chapter, Mr. Michael Imonitie, said goods were not being cleared at the port due to the challenge. Imonitie disclosed that out of 100 importers, only 20 were taking their goods out of the ports. According to him, this means that most goods will be incurring demurrage and overtime or even abandoned. “We all know that there is going to be a negative effect on the clearance of vehicles at the port. “Since the government announced the uniform exchange rate, the exchange rate has risen from N422.3 to N589.55 and now N770.88 which is the pure black market rate. The exchange rate of CBN is N756/N757, the government was supposed to have given us a notice of either 60 or 90 days before implementation. “This is because a lot of importers have opened their Form M at the old exchange rate. I have not seen any importer that have done any new importation. Most of the goods in the port are old stock. “This means that the end cost of goods will be high. If I am forced to pay the exchange rate twice what I have paid before it means that the end users will be the ones to suffer it,” he said. He said that the burden was on importers and being felt by the clearing agents, and the customs brokers, due to the jobs they do, and most of their clients do not have the difference to pay for the exchange rate,” he said.