By Odilim Enwegbara

Just ask yourself how come the supposedly floated  naira, which makes its value be determined by the market forces is still defended by the same Central Bank of Nigeria (CBN) that floated it? Put differently, why did the CBN pretend to have floated the naira and contrary to this policy of floating around the world, the same CBN continues to intervene in the forex market rather than participate in the market?

Another important question to ask is: why, following the floating announcement, the naira lost the unheard-of 31% value, selling at N288.85 per dollar on June 20, 2016?

The next question you should ask yourself as a concerned citizen is: why did the CBN have to float the naira immediately after the 2016 budget was signed into law, with the naira officially pegged at N197 per dollar?

These questions will provide answers about how the forex coup was carefully orchestrated by those who would soon start making trillions of naira through forex management manipulations.

As they limited access to dollars to few large banks and traders, at N197 rate, the arbitrage created became so unheard-of along with the opportunities to exploit the huge gap created by the artificial scarcity. While the planned kill has been going on, the economy has been in flames.

Thanks to CBN preferring to intervene when the right policy would have been to participate in the forex market from time to time. Not minding this being the common thing done when a currency is floated, as part of the agenda to defraud our commonwealth, those behind this forex scam decided intervening in the forex market.

Also, the huge cost it imposes on the economy, notwithstanding. So, through intervention in the forex market, the CBN has continuously distorted the forex market; a supposed market where suppliers and buyers ought to be fighting to achieve equilibrium.

But before we go further, it is important to refresh our minds with the banning of 41 goods and services, which took place on May 3, 2015 at the critical time when neither Jonathan nor Buhari was fully in charge. I wouldn’t make us to dwell on whether or not the CBN went beyond its mandate by including what was ordinarily an important policy exclusively reserved for our fiscal policymakers, which should have been accompanied by an outright ban of such goods and services entering the country’s economic space by the Nigerians Customs Services (NCS).

But what we should not forget is the fact that most of the imported items banned from accessing forex at the Nigerian official forex markets such as “iron rods, cold rolled sheets, wire rods, reinforcing bars, polypropylene granules, glass and glass ware, textiles, plastic and rubber products, as well as tomato value chain sectors,” are among the high consumers of forex.

Yes! Most analysts were concerned that such a CBN forex policy was done without taking into full account the critical intermediate role most of these products play as critical inputs for many manufacturing activities. In the meantime, importers of critical industrial plants and machinery as well as raw materials who were either not ready to pay such huge difference as they are denied access to the official forex markets saw no other option but to lay off most of the workers as they are forced to reduce their business activities.

Importers of cheap Chinese and Indian consumer goods, who don’t mind the high forex cost, including accepting from the commercial banks at the black market rate, continued to have their import businesses to blossom, thanks to their readiness to being in bed with top CBN and commercial bank officials, who rechanneled billions of dollars to the black market through round tripping, from where their fronts sell it to these importers of cheap consumer goods.

For those who apply for forex from the official forex markets, once the commercial banks use their naira to secure the forex, and once the banks have the forex from the CBN transferred to their overseas accounts, the same commercial banks will turn around to lie to these customers, by telling them that they were unable to secure any forex for them from the said official market.

In the meantime, the commercial banks will then go ahead to advise them to accept the so-called forex in their foreign bank accounts, banks that are actually the partners. Since these importers of plants and machinery or critical industrial raw materials have no other option, they of course go ahead to accept the black-market rates these banks always offer them.

The negative consequences on our economy were unbelievably huge; leading to the economy’s eventual succumbing to the powerful forces of recession. While each year as a result, over a trillion of naira is made in this forex fraud perpetuated by these powerful officials of CBN and their presidency counterparts  — who hardly care about the huge cost and the sufferings their actions have continued to unleash on the masses of Nigeria  — many more businesses either collapsed or joined others in fleeing the country taking along with them hundreds of thousands of jobs.

But you see, that was not what those central bankers had in mind. Their interest, which was selfishly driven to eventually force the importers of these 41 banned items to henceforth source their forex from the black market at exorbitant price. This is where the free hundreds of billions of naira are made by top officials of CBN and their fronting commercial banks, especially with foreign currency (domiciliary) accounts with commercial banks forced to be shut down by the same CBN.

Now try to reconcile this policy with the CBN sharing forex among some bureau de change that are indirectly closely linked to, if not owned by, top CBN and presidency officials. It is here that this forex policy that pretended to be banning 41 imported goods and services for the good of economy exposes the fraudulent intentions of those who hurriedly made it.

The question, therefore, becomes: but why is CBN handing billions of subsidized forex (dollars) to the supposed forex users  —  through the banks  —  through its forex market intervention and done so at such an incredible loss to our commonwealth, when participating in the forex market would have been earning government and the whole country the same hundreds of billions of naira we are losing as a result of this carefully constructed forex policy summersault fraudulently perpetuated by the CBN at each intervention in the forex markets?

The answer if not already obvious is not far-fetched. By intervening rather than participating, the managers of our forex at CBN have decided to share with banks and many big time consumers of forex like Dangote, the gains that would have been accruing to government had they participated in the forex market.

Always selling the dollar far below the forex market value makes the CBN subsidise dollars from time to time at atrocious rates. To now know the level of forex fraud associated with this underselling of the dollar is to know the kind of huge gains that necessitate that.

Here is it: the CBN monetises the oil dollars to naira and hands the three tiers of government the naira equivalent, say at N197 from 2016 to May 2017  –  the month the 2017 budget decided to peg the oil dollars at N305 per a dollar.

As a result of this carefully engineered free fall of the naira, during the 12 months (June 2016 to May 2017), the CBN in pretence of defending the naira was pumping minimum of $1 billion into the forex market and the least naira exchanged for a dollar was at N350 when the parallel markets were selling at not less than N450.

Of course, you wouldn’t be wrong to say that CBN officials were making N153 (i.e. N350 — N197) for government on each dollar they sold in the official forex market, even though the Fiscal Responsibility Act permits the apex bank to keep 20% of that profit. But there is the hidden truth that makes top CBN officials such instant trillionaires.

Now, by selling at such a huge gap between official rate (N350) and parallel market rate (N450) a whopping N100 is stolen. How? For you to get the artificially scarce naira for your imports or other foreign transactions, you are required to accept dollars at the parallel market rate, and why shouldn’t you?

If you are an importer of finished consumer goods? Ok then, let us multiply 12 billion by 100 and what do you get, N1.2 trillion. That was more or less how much these folks at CBN stole from all of us between June 2016 and May 2017.

Again, this fraud will run from June 2017 to May 2019, since 2018 budget will run up to May 2019 at N305 per dollar. While since June 2017, they have drastically reduced government’s profit with naira officially increased to N305 and officially selling at about N310 against parallel market at N380 (more or less), the folks in charge of disbursing the forex at CBN go behind to insist on the difference between the official rate and the parallel market to be handed to them or else no dollars can be allocated to the said end user. And being importers of finished consumer goods, they always hand them N70 per dollar, being the difference between N310 and N380. Here, we are talking about N840 billion (70 x 12 billion) between June 2017 and May 2018.

By now, it is crystal clear for one to understand the kind of mind-boggling forex fraud taking place at our apex bank that is being hidden away from Nigerians. But then, that is not all, as you may presume that they have some human feelings.

What makes the crime total and devastating is the fact that, the loots are reinvested into the system by lending back the money to government at an atrocious interest rates — in most cases between 14% and 16% (N840 x 0.16) gives you N134.4 billion, that is more or less the extra money to be made from their N84 billion loot between June 2017 and May 2018. In the case of interest earned between June 2016 and May 2017 (N1.2 trillion x 0.16), they went home with as high as N192 billion free cash.

What we can’t tell is if in this scam, they have some powerful politicians whose...

http://www.theguildng.com/a-forex-of-fraud/

Economic management in a recession is not as straightforward as theoretical economics would have people believe. It's best to look at outcomes in deciding if an approach worked. In this case, as multiple data has confirmed that the Nigerian economy has returned to growth, we can conclude that the Central Bank's economic management approach works.