Amara Nwankpa @Nwankpa_A, the Director of Public Policy Initiatives at Yar'adua:s foundation replies Federal Lawmaker, Ibrahim Obanikoro on his call for CBN to close all Domiciliary Accounts in Nigeria. Recall that Ibrahim Obanikoro, a House of Representatives member, had tweeted:

"I am not the CBN Governor but at this moment, I'm of the opinion that CBN should mandate that all dorm accounts be closed for the next 12 months. Let's see the effect on the Naira. After all you can't go to any of the Western world and open a foreign currency account. Your opinion."

In a reply to Ibrahim Obanikoro's tweet, Amara Nwankpa wrote:

The series of tweets on "Dorm" accounts from this account illustrate how financial ignorance and economic illiteracy can end up doing unintended and irreversible damage to the economy.
Thread:

1. Lets start with the fact that the author of this tweet - who is also a member of Nigeria's parliament - calls it "Dorm" accounts. It suggests ignorance of the name and the policy intention of these kinds of accounts. The correct name is "Dom", short for Domiciliary Accounts.

2. Dom accounts are a key aspect of the policy to incentivize potential forex inflows from autonomous sources into Nigeria by allowing autonomous recipients of these funds to DOMICILE them in Nigerian banks at close to the value at which the transaction was initiated.

3. "Autonomous Sources" are the primary source of forex inflows into Nigeria. In the Q4 2014, inflow through autonomous sources amounted to US$15.43 billion, which accounted for 65.4 per cent of the total inflow through the economy.

4. The CBN recognized this when, in late 2020, it issued directives reinforcing the rights of international money transfer beneficiaries to have unfettered access to their $$. Consequently, inflow improved. CBN even started and continued a N5 for each dollar received promotion

5. It is a no-brainer really. If you want people to bring Forex into Nigeria you have to create a system that assures them, at the very least, that the money they bring in will have the value it would have had if it were kept outside Nigeria.

The 5 points above is why the quoted tweet is dangerous and could have an effect opposite to what the stated intention is. It is a direct attack on the single most important source of Forex inflows to Nigeria right now.

As we have seen in the UK this week, panic is a natural reaction to uncertainty. Careless & ignorant statements can fuel uncertainty. The last set of people that Nigeria can afford to panic right now are "autonomous sources" whose steadiness is perhaps our saving grace.

For those who are interested in the source of the data I have include in this thread, please see the CBN Fourth Quarter 2020 Economic Report. You can start reading at page 46.

https://www.cbn.gov.ng/Out/2021/RSD/Fourth%20Quarter%202020%20Economic%20Report_1.pdf

https://threadreaderapp.com/thread/1443191365496606721.html

See previous thread https://www.nairaland.com/6777763/ibrahim-obanikoro-cbn-close-domiciliary

Effect of electing and voting an economic illiterate as a Federal Lawmaker.

If you want a good Naira against the Dollar.Work more on your local products so they can be exported abroad.

Emefiele should have been fired by now.Dude is just a financial gambler.After closing accounts of Abokifx and bringing down their website,has there been improvement on the Naira?No.

Looking forward to how the E-Naira he want to launch come Oct 1st have meaningful impact on the economy.

The part that no one can go to the Western countries to open a dorm account is FALSE. I know many Europe-based freelancers (they call themselves digital nomads) who own US dollar accounts in their countries.

Closing dorm accounts is like blocking one of the key channels through which Nigerians bring foreign currency into the country and it is not a good decision. Nigeria needs dollars desperately.

Clout chasers. It would make sense what the law maker is saying if the CBN prevents local funding of the domiciliary accounts from within Nigeria (by cash or electronically). It should be tied to receiving inflows only. The only exception would be for banks tying outflows approved to the account but not lodge it in.

Allowing it to be funded locally is the reason why many hoard forex. Trust me if they do this, rates would drop drastically.

Over to the financial experts

This can be managed without allowing the operation of a domiciliary account but by using a bank's internal account tied to your normal naira account.

We have no business withdrawing dollars or pounds to go exchange outside a banking environment. BTA/PTA should only be collected at the airport departure environment after checking is all done.

When CBN introduced the Naira for dollar promo and allowed withdrawal locally in dollars I knew this would happen. The market would never be saturated enough to bring down the rates in Nigeria. We are a different specie and those kind of policies don't work here

SmartPolician:
The part of not going to a Western world to open a dorm account is FALSE. I know many Europe-based freelancers (they call themselves digital nomads) who own US dollar accounts in their countries.

Lastly, this is a good point.

3. "Autonomous Sources" are the primary source of forex inflows into Nigeria. In the Q4 2014, inflow through autonomous sources amounted to US$15.43 billion, which accounted for 65.4 per cent of the total inflow through the economy.

See how the educated illiterate Federal lawmaker was really taken to the cleaner's

One thing is certain, the current Nigerian president and CBN governor happens to be the worst in the history of this country.

The Obanikoros are well known to be senseless but I didn't know it has gotten to this extent.


Like father Like son.

Buhari and thus present administration can destroy any country

He is Obanikoro's son for fck sake.

So, why are people surprised he's this dumb and stupid?

A snake will always birth a long thing.

They need to ban dom account because Nigerian politicians are abusing it by using it to hoard dollar thereby causing scarcity.

There is a tree that has many branches with lots of fruits on it in the Eastern part of the country.

The tree is called stupidilae foolishilie.

Nigeria. A funny country where everyone is an expert in everything yet there is nothing to show for it.

Make una take style push 20 million come my account make I taste whether my bank dey work

Ok

His father must be very proud of him.

I am not the CBN Governor but at this moment, I'm of the opinion that CBN should mandate that all dorm accounts be closed for the next 12 months. Let's see the effect on the Naira. After all you can't go to any of the Western world and open a foreign currency account

The BDC operators and the corrupt politicians are the ones cashing in on this dollar issues BIG TIME.
Do not be surprised after they are done with all their manipulations making billions of profits converting dollars to Naira, don't be surprised to see the exchange rate dropping back to #350!
That is how they roll.
May God save Nigerians and Nigeria from all manner of corruption.

Meanwhile.......

War against the naira is of high
Can't u do anything to wake this money up

There is always a merit and demerit side of every action

It is stupid suggestions/policies like this that will make investors start getting jittery and exiting with their money. I wonder the logic behind his thought.
You have to understand that a lot of liquidity is provided by customers with domiciliary accounts. If the banks were to return all USD deposits to customers, I don't think the effects will be positive on the economy -- if it is even possible in the first place.

B

Maybe he meant 'dorm' as in dormant

These people dey use trail and error for everything
Your #1 #plug for #original #backwoods in #naija

bigtt76:
Clout chasers. It would make sense what the law maker is saying if the CBN prevents local funding of the domiciliary accounts from within Nigeria (by cash or electronically). It should be tied to receiving inflows only. The only exception would be for banks tying outflows approved to the account but not lodge it in.

Allowing it to be funded locally is the reason why many hoard forex. Trust me if they do this, rates would drop drastically.

You made a lot of sense here.

Yea, exact reason we shouldn't be discussing it!

senoir mumu man

No need of long grammar.

Forex inflow strengthens the receiving country's economy and makes their local currency stronger.

The rep guy is just a normal typical fool