AFTER the takeoff of the new policy on foreign exchange two days ago, the Central Bank of Nigeria (CBN) may have asked deposit money banks that issue internationally enabled cards to ensure that as they accept foreign currency deposits, they should also make adequate provision to honour the resulting demand of their customers.

Besides, the apex bank said policies relating to foreign currency deposits in banks and stoppage of weekly foreign exchange intervention at the Bureaux De Change (BDC) segment are for the good of the economy.

It promised that the latest measures would boost reserves, rub off positively on naira exchange, as well as end the arbitrage on the currency, being perpetrated by BDC operators.

Meanwhile, there are strong indications that unless necessary measures are taken and urgently too to address the scarcity of foreign exchange, indigenous pharmaceutical industries may run out of raw materials for production of essential medicines the end of January 2016.

It was also learnt that over 70 per cent of the country’s drug needs are imported and less than 30 per cent manufactured locally with some raw materials like pharmaceutical starch, still imported.

The Director of Financial Market, CBN, Emmanuel Ukeje, who gave the indications during a television interview said with the new rules, banks are responsible for their customers’ dollar deposits and cannot come to CBN to ask for dollars to settle them when they need them.

“If somebody gives bank dollars and wants you to transfer them, inadvertently, what the person has done is that you are holding that money on the person’s behalf to meet the demand when the person needs it.

‘‘Banks that issue the naira and dollar cards take responsibility now. They must make sure that they have enough of the denomination to backup demand. This is different from before, when they commit and run to CBN because it would immediately become a national issue,” he said.

He maintained that the CBN had supported banks’ decision to stop acceptance of foreign currencies earlier because their vaults were saturated and posed more risks to the industry in the form of cost of keeping idle funds and insurance.

He noted that by the new rule, dollars deposited in cash cannot be used for the settlement of import bill, “but can only be withdrawn in cash as well from the bank. But when you travel with your card, you can now pay with it through wire transfer. Importation is only funded with foreign reserve in the customers’ escrow accounts.”

But Dr. Austin Nweze of the Pan Atlantic University said the new policy would enthrone a regime of competition among the parallel market operators, because the cheap dollars from the CBN would have gone.

Though he acknowledged that the CBN only did an aspect of the policy expectations, he was optimistic that whatever price the naira exchanges at the moment would only be in the short term, because the hidden dollars would come out to reduce supply shortages.

However, he urged the authorities to be serious about leakages that would distort expected results and support local industries to achieve import substitution strategy to reduce import-induced pressure.

An Abuja-based development consultant and civil society activist, Jide Ojo, also commended the CBN’s decision to stop the sale of foreign exchange to BDCs and the lifting of the ban on bank customers who hitherto had been barred from depositing foreign currencies in their domiciliary accounts.

“CBN ought to have stopped the sales of forex to BDC long ago given the fact that it was not an international best practice, as Nigeria remained the only country where such is done worldwide.

“What is needful at this point in time is for the CBN to strengthen its monitoring and evaluation unit and ensure that both the BDCs and bank customers operating domiciliary accounts are not allowed to abuse its policies any longer,” he said.

The Guardian also learnt that the country has only 180 indigenous manufacturers of medicines and over 500 importers.

Also, there is the fear that if the country does not start local production of vaccines before 2022, she may not have enough for the prevention of childhood killer diseases such as tuberculosis, polio, measles and pneumonia.

The Global Alliance for Vaccine and Immunisation Initiatives (GAVI), which has over the years been subsidising and giving Nigeria relevant vaccines for free, has formally advised the Federal Government to make arrangements to be self- sufficient in vaccine production before its pullout date of 2022.

Also, with an all-time low, at least in the last 10 years, of 3.65 per cent of the 2016 national budget for health, it is believed that the sector will struggle to meet its basic obligations not to talk of making advances in research and development.

The Guardian analysis indicates that Nigeria has been having an average of five per cent of its national budget for health since 2004 and has not been able to meet the 15 per cent Abuja Declaration set by African leaders in 2001 and endorsed by the World Health Organisation (WHO).

President of Pharmaceutical Society of Nigeria (PSN), Ahmed I. Yakasai, told The Guardian yesterday: “Many pharmaceutical industries applied for letters of credit but the commercial banks could not process them. Is it lack of dollars? Is it due to restriction by the Central Bank of Nigeria (CBN)? Is it a national policy? We don’t know. But they complain that they couldn’t access dollars to import raw materials and since the raw materials in their warehouses would be exhausted by the end of this January, they won’t be able to produce. The consequence is that Nigeria will not have medicines both for local consumption and possible exports.”

On plans to start local manufacture of vaccine by 2022, Yakasai said: “The country’s health sector is still battling with poor access to public health interventions, while diseases like Human Immuno-deficiency Virus (HIV)/Acquired Immune Deficiency Syndrome (AIDS) and tuberculosis are still with us. There is a need to review our dependence on donor agencies, hence the government should create an enabling environment by way of intervention funds to enable our local drug manufacturers to produce antiretroviral drugs and even vaccines.

“As we are all aware, GAVI is gradually withdrawing from Nigeria. I must appreciate the Federal Government through the National Primary Health Care Development Agency (NPHCDA) for organising a stakeholders forum on vaccines production to stimulate interest and develop a business plan for local vaccines production in Nigeria.

“We can do it if there is the enabling environment and government is really serious as initiated by the NPHCDA that they really want to mobilise pharmacists and other stakeholders to go into production.

If the environment is good and they are able to give intervention fund, they are able to encourage manufacturers. What is a big deal in vaccines production?

“I am calling for the release of the intervention fund.
The last regime promised and nothing came out of it. If the Federal Government gives us intervention fund, it will go a long way in helping the system.”

On the 3.65 per cent of national budget for health, the PSN President said: “3.65 per cent might look small compared with what is recommended and what was obtainable in the last five years but if fully implemented it will suffice.

‘‘Also, the one per cent of Nigeria’s consolidated revenue from the National Health Act, when implemented, and grants by international donor partners through NPHCDA, which will manage 45 per cent of the fund.

“The problem of Nigeria’s budget for health has been that of implementation. Last years’ budget was about five per cent but only about two per cent was implemented. If the government can implement the whole 3.65 per cent of the 2016 budget on health, it would go a long way in making the sector better and Nigerians healthier.”

Source: http://www.ngrguardiannews.com/2016/01/cbn-directs-banks-to-meet-customers-domiciliary-account-needs/

Sack the clueless and useless CBN Governor. Until then no solution would have been reached. He's so reactive instead of proactive

He noted that by the new rule, dollars deposited in cash cannot be used for the settlement of import bill, “but can only be withdrawn in cash as well from the bank. But when you travel with your card, you can now pay with it through wire transfer. Importation is only funded with foreign reserve in the customers’ escrow accounts.”

Can someone who understands this please explain. Tnx.