By Ofe Ivharue
The Central Bank of Nigeria on Tuesday frowned at the growing practice of transacting business and services in foreign currencies instead of the Nigerian currency, warning schools and landlords against such act.
The CBN governor, Godwin Emefiele, said this in Abuja in a communiqué issued at the end of the Monetary Policy Committee meeting with various stakeholders, where he warned landlords and school proprietors who demanded rents or fees in dollars, while transacting business in foreign currencies.
He added that the official currency for doing business in Nigeria remains the Naira, disclosing that collecting rents or school fees in dollars in Nigeria is illegal. “We like to advice those involved in these practices to desist from them, because CBN would very soon begin to go after them,” Mr. Emefiele warned.
While explaining the efforts to check the pressures on the Naira as a result of the unnecessary demands for foreign exchange, he said steps must be taken to prevent the dollar from dominating the country’s economy.
Mr. Emefiele, however, denied prioritizing the sale of foreign exchange to foreign investors, explaining that all such transactions on a daily basis were only to people with effective demand in line with its policy, noting that attempts to meet the demand by foreign investors for foreign exchange was part of the promise of unhindered access to the country’s foreign exchange market to support their needs to raise funds so as to encourage them come to invest in the country.
He further explained that the closure of the official foreign exchange market was to remove rent-seeking activities or opportunities for people who felt they wanted to take advantage of the vulnerability in the FOREX market.
All foreign exchange transactions, according to him, are now done in the open, pointing out that with these steps, there was no way JP Morgan would not remove Nigeria from the watch list of those with liquidity issues in their economy in due course.
On the outlook of the Naira, the CBN governor said the outlook based on the interbank rate N198 to the dollar, was appropriate, given the pressures seen in markets as a result of the drop in crude oil prices and the impact the national currency.
He said a number of measures still need to be taken, including deepening the market, improving supply and looking at areas where demand pressures or inefficiencies could be cut.
“We are optimistic that after the elections confidence in the currency and economy will improve. Elections will come and go, Nigeria will remain and business will continue as usual. The economy will remain resilient and in the upward direction.
On foreign reserves, the governor said the level was good enough to support five to six months of imports, adding that he believed this was good enough to support business and the economy.
Average inflation for the developed economies, according to him was estimated at 1.5 per cent in 2015 due to the increasing output gap, weak recovery which are strong regional currencies, National Bureau of Statistics estimate, Mr. Emefiele noted, showed that real gross domestic product growth rate stood at 5.94 per cent in the 4th quarter of 2014, lower than the 6.77 per cent in the corresponding period of 2013 and the 6.23 per cent third quarter 2014.