CBN to directly allocate forex to end users

(Nigeria) The Central Bank of Nigeria, CBN, is now to allocate foreign exchange to end-users, in a bid to effectively manage the nation’s depleted foreign reserves.

Director of Monetary Policy of the CBN, Mr. Moses Tule gave the indication in Abuja.

He said, “Our priorities as a nation for the allocation or use of foreign exchange is 1) for the settlement of matured LCs letters of Credit that have been opened for importation; 2) for the importation of petroleum products until such a time either when we have our refineries fully operational and we are not in a position to import fuel again to ensure that the wheels of economic development continue turning and running  and 3) for the importation of raw materials.

“Now by the time we meet these giving the level of current flow into the reserves by the time we meet these three priority areas you will discover that people who are using their debit cards overseas for shopping can never be on the priority list, we would then go back to the point where the foreign exchange which is a stock dries up that is the position we are in today.

“We do understand that it may not be all that the demands will be for shopping.  We have seen that the reserves are not there and what we have we have to use essentially for the purposes that will keep the wheels of the economy running. We have to produce for export we can't continue to depend only on the export of crude oil.

“It is a healthy development  where Nigerians can no longer use debit cards abroad. But it is inconvenient. Right now the country is going through very difficult times because of developments in the oil market. Foreign exchange under the condition Nigeria has found itself has become a seasonal commodity. Seasonal in the sense that it depends on the movement of the price of oil if oil prices are high then we build reserves if oil prices are low then we have no reserves then we are in a crisis.

“Does the CBN sympathize with the situation Nigerians find themselves not being able to use their debit cards outside the country, yes the CBN certainly does sympathize with the hardship Nigerians are facing but can the CBN stop it, at this point we are in in this country, the obvious answer is that the CBN cannot stop what the banks are doing now and the reason is very obvious.

“As soon as we build up reserves when you us building reserves $50,$60,$70, $200 billion or more.  So the moment we begin to build reserves we expect that just as this restrictions were not there most of the restrictions will be lifted but for now every hand needs to be on deck. We need to earn foreign exchange as a country.  You can improve your business processes in order to export and earn foreign exchange and that is what the country is calling on patriotic Nigerian businessmen to do.”