• BDC operators run out of supply as politicians warehouse dollar• CBN’s rigidity stalling capital inflow, says Yusuf
Findings suggest that some currency traders cannot single-handedly raise as little as $1,000 as they have run out of liquidity following the massive mop up during the presidential nomination exercises. A dealer in Lagos said most of his colleagues ran out of supply in the last few weeks. Asked what could have been responsible, he said the greenback was mopped up for use by politicians and after the conclusion of party primaries, the money is yet to get to the retail end of the market.
“When I mentioned to the ‘aboki’ that has been supplying me dollars for over seven years that I needed $25,000, he just told me to forget it, that he can’t raise it even if he combs the whole of Lagos,” she said. A businessman and presidential candidate in the 2019 general elections, Dr. Tope Fasua, put the culture of dollarisation of the political space and general dollarisation of the society in the same basket.
Ken Ife, a professor of economics, said those who are hoarding hard currencies, including the delegates, would start offloading once it is obvious the exchange rate is not going beyond N610/$. Sources in the financial system said much of the hard currencies being distributed by politicians were not sourced locally. “A large chunk of it is from overseas. A lot of banks are party to the transfer of the money, much of which is under-the-table deals.
In the meantime, demand takes the upper hand worsening the historical volatility of the market and stretching the capacity the economy to a limit. Prices, which are often based on black market rates are being reviewed across the board, with dire consequences for inflation. For the first time, the arbitrage between the official and black market rate is almost N200 per dollar, which analysts have decried as a blight on the economy.
The CBN Governor, Godwin Emefiele, had faulted calls for clean floating of the exchange rate, saying the rate will spiral out of control. He said that Nigeria’s manufacturing sector was not mature for such experimentation. “Given the foregoing, we hereby request you to furnish us with information on the date fixed by the CBN Board to end multiple exchange rates regime and unify the rates in the country.