On November 1, 2022, the Economic and Financial Crimes Commission (EFCC) raided offices of bureau de change (BDC) operators in Abuja. Videos have surfaced online showing EFCC officers arresting dealers, and many Nigerians have the same question: why?
BDCs are the latest scapegoats
According to Vanguard, the reason for the raid stems from fears that BDC operators are behind the current dollar scarcity and the naira’s continuous fall. But the highhandedness of the raid isn’t new, and is only the latest in a long list of bizarre attempts to stop the naira’s decline.
For example, in September 2021, the Central Bank of Nigeria (CBN) banned AbokiFX from publishing parallel market rates, aka black market rates. The bank accused the organisation of undermining the economy and the CBN governor, Godwin “Meffy” Emefiele, even publicly offered to fight the owner of AbokiFX.
Before the AbokiFX ban, the naira was ₦520 to the dollar at the black market. It’s now down to ₦816 to the dollar.
The Abuja raid is also not the first time the government has directly targeted BDC operators. In 2015, when the CBN was desperate to defend the weakening naira, it came up with a brilliant idea — cut down trees in Abuja. As the logic went, the BDC operators would no longer be able to use the trees as shade from the sun while conducting their business.
What’s the real reason for the scarcity?
According to a report by Guardian, the dollar scarcity is fuelled by a number of factors. One of those factors is that domiciliary account holders are now restricted to one-way transactions. That is, they can deposit money into their dollar accounts but can’t withdraw. Wary customers who no longer have faith in banks are seeking alternatives and leaving banks dollar-strapped.
Another factor is rationing as banks are only getting a stipulated amount of dollars from the CBN which is clearly not enough to serve their customers.
Ultimately, the big elephant in the room for the dollar scarcity is the rapidly declining naira. The value of transactions conducted in the local currency fluctuates quickly from day to day, so most people would rather save or transact in dollars.
So what next?
For starters, the solution to the naira’s decline can’t be the harassment of BDC operators. They’re simply a consequence of an untenable economic situation. Confidence in our currency is at an all-time low and this has made people resort to more stable currencies.
The CBN is adopting other measures to address the problem, including the recent plan to redesign the naira. Yet, even that move has been met with doubt by the Ministry of Finance. The low dollar remittances from the global oil boom also hasn’t helped our cause either.
Meffy has to step in and resolve this crisis or we may be heading for ₦1,000 to the dollar by the end of the year. By then, not even cutting all the trees in the world would save the naira.