Uchechukwu Okoroafor,Abuja
Against the backdrop of the free fall of the naira, the Office of the National Security Adviser (ONSA) and the Central Bank of Nigeria (CBN) have initiated a joint effort in a renewed attempt to safeguard Nigeria’s foreign exchange market and combat speculative activities.
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The move announced recently by Zakari Mijinyawa, Head, Strategic Communication, ONSA, is coming amid the government’s frustration that all previous measures intended to halt the drift have yielded little success.
The new move will see the co-opting of the Economic and Financial Crisis Commission (EFCC), Nigeria Customs Service, and the Nigeria Financial Intelligence Unit (NFIU) to tackle the menace and stabilize the nation’s foreign exchange. The statement lamented that even though the CBN has put in place necessary initiatives, including the setting up of a 7,000-man special task force by the EFCC, they have been sabotaged by speculators operating domestically and internationally.
The statement blamed the continuous depreciation of the naira on the attitude of racketeers. It affirmed that the main objective of the new joint effort is to systematically identify, thoroughly investigate, and appropriately penalize individuals and organizations involved in wrongful activities within the FX market.
It reads: “In a concerted effort to safeguard Nigeria’s foreign exchange market and combat speculative activities, the Office of the National Security Adviser (ONSA) and the Central Bank of Nigeria (CBN) are joining forces to address challenges impacting the nation’s economic stability.
“However, the effectiveness of these initiatives is being undermined by the activities of speculators, both domestic and international, operating through various channels, thereby exacerbating the depreciation of the Nigerian Naira and contributing to inflation and economic instability.
“Recall that, to address the exchange rate volatility, the CBN initiated a comprehensive strategy to enhance liquidity in the forex market, including unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for Bureau De Change operators, enforcing the Net Open Position limit for commercial banks, and adjusting the remunerable Standing Deposit Facility cap.
“To reduce the pressure on the naira, the Economic and Financial Crimes Commission (EFCC) has raised a 7,000-man special task force across its 14 zonal commands to clamp down on dollar racketeers. “Yet, recent intelligence reports have highlighted continued illicit activities within the Nigerian foreign exchange market, the ONSA and CBN are therefore embarking on this collaborative approach to tackle these infractions. “This partnership will involve a coordinated effort with key law enforcement agencies, including the Nigeria Police Force (NPF), the Economic and Financial Crimes Commission (EFCC), the Nigeria Customs Service and the Nigeria Financial Intelligence Unit (NFIU). “The primary objective of this alliance is to systematically identify, thoroughly investigate, and appropriately penalize individuals and organizations involved in wrongful activities within the FX market.
“By leveraging the expertise of these agencies, we aim to deter malicious practices, protect investor interests, and promote sustainable economic growth. “This joint effort underscores the commitment of the Nigerian government to improving its Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) framework and exiting the grey list of the Financial Action Task Force. “In addition, the efforts will make progress in ensuring a stable and transparent foreign exchange market, fostering investor confidence, and advancing the nation’s economic well-being.”
It therefore means that in response to the persistent free fall of the Nigerian naira, the Office of the National Security Adviser (ONSA) and the Central Bank of Nigeria (CBN) have joined efforts to fortify Nigeria’s foreign exchange market and combat speculative activities.
While this initiative signals a renewed attempt by the government to address the economic turmoil, a critical examination reveals that such an approach may not be the panacea needed to restore the value of the naira.
The announcement, made by Zakari Mijinyawa of ONSA, outlined the involvement of key agencies such as the Economic and Financial Crimes Commission (EFCC), Nigeria Customs Service, and the Nigeria Financial Intelligence Unit (NFIU). This collaborative effort aims to identify, investigate, and penalize individuals and organizations engaged in wrongful activities within the foreign exchange (FX) market.
Despite the government’s frustration with previous measures’ limited success, it is imperative to question whether this joint initiative can truly tackle the root causes of the Naira’s depreciation. Blaming speculators for the continuous decline is a recurring narrative, yet a more comprehensive strategy is needed to address the multifaceted challenges contributing to economic instability.
While the government has implemented various initiatives, such as unifying FX market segments and enforcing regulations for financial institutions, the persistence of illicit activities within the FX market remains evident. The creation of a 7,000-man special task force by the EFCC to clamp down on dollar racketeers has not yielded the desired results.
The collaborative approach involves an alliance with law enforcement agencies like the Nigeria Police Force, EFCC, Nigeria Customs Service, and NFIU. While the intention is to protect investor interests and promote economic growth, the effectiveness of penalizing individuals alone may fall short of addressing the underlying issues affecting the naira’s value.
To genuinely improve the Naira’s value and stabilize the foreign exchange market, the government should consider a more holistic strategy. This includes comprehensive economic reforms, addressing structural issues, promoting transparency, and attracting foreign investments. Additionally, efforts should focus on diversifying the economy and reducing dependency on oil, as the volatility of oil prices significantly impacts the Naira.
In conclusion, while the joint effort by ONSA and CBN signifies a commitment to combating economic challenges, a broader and more nuanced strategy is required to address the root causes of the Naira’s depreciation. The government must foster an environment conducive to sustainable economic growth, build investor confidence, and enact reforms that transcend punitive measures, ultimately leading to a more resilient and stable economic landscape.