Senate Summons CBN Over Falling Naira Value

Apparently worried by the increasing depreciation of the Naira, the Senate on Wednesday summoned the Governor, Central Bank of Nigeria (CBN), Godwin Emefiele, to briefing on the implications of Naira’s depreciation for the nation’s economy.

The naira fell N235 to US$ in the parallel market on Tuesday, despite exchanging at N209 the previous day. Last Friday, it sold for N225, a significant appreciation from its all time low of N243.

Godwin Emefiele, CBN Governor

“We are expecting about $80 million dollar sales from the central bank today, which could further boost liquidity in the market and ease pressure,” one operator told Reuters.

Aminu Gwadabe, president of the bureau de change operators, said the CBN had put on hold its directive asking them to request dollar buyers to provide their Bank Verification Number (BVN), a new biometric identification for commercial banks customers aimed at curbing speculative bids.

“The BVN exercise is put on hold and there is a huge market calmness. The naira is gaining strength, we expect it to close below N215 to the dollar,” he told Reuters.

The Senators also urged the Federal Government to step up efforts at diversifying the national economy from the oil export into one that depends on taxes, agriculture, manufacturing, international tourism and solid minerals prospecting.

The above resolutions followed a motion entitled: “The state of economy: Naira depreciation and its implications,” sponsored by Senator Nazif Suleiman.

Suleiman observed that the foreign exchange needs of the various sectors of the economy are not presently made available because Nigeria’s commitments in the global economy are also not made available.

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“The state of Nigerian economy as it affects the growing rate of the depreciation of the Naira is a very serious concern. Naira has depreciated in the last few months at a much faster rate than it had appreciated over the last two years.

“The cause of this depreciation is the consequence of the negative cash flow as a result of the downward trend of oil price, which is further worsened by speculations in the foreign exchange markets.

“The banking industry may be currently defaulting in the global economy, and that is sending a bad signal and bad image about the Nigerian economy. This resultant speculation is resulting to a huge capital flight with its attendant inflationary consequences, which will affect an average Nigerian on the street.

“Illicit fund flows and money laundering going through Nigerian financial system contributes in weakling the value of the Naira, which has led to the recent decisions of the CBN to increase its vigilance to ensure that Nigerian banks are not used as conduit for illicit funds flow and money laundering in foreign currencies.

“The procedure for processing demand and supply of foreign exchange by the CBN be reviewed and various additional options considered to stem the precipitous depreciation of the Naira, and thereby discouraging speculators,” he said.

They include: That the Senate urges the Federal Government to stop the leakages in the national economy; and that the Senate also urge the Federal Government to give marching orders to the CBN to bring to book anyone, who is found wanting for money laundering and other related offences.

Contributing, Ali Ndume (APC, Borno South) said the government has failed in the management of the country’s economy over the years, stressing: “We are not supposed to lament here. We know the problem and we are here to solve the problem.”

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He added that the senate has the mandate to assist the government to change the deplorable economic situation in the country. He however blamed the import nature of the economy for the unfavorable economic environment.

“Before we embark on any legislation, we need to bring urgent measures to reverse existing situation.

For Senator Gbolahan Joseph Dada (APC Ogun APC), the country must urgently make laws to tackle fraud, lamenting the collapsed manufacturing sector, that has made the economy import-dependent.

Senate President Bukola Saraki, while ruling on the motion, urged the Federal Government to be firm in the defence of the naira, adding that the harm being done by currency speculators to the economy is clear to everyone.

“We will do all we can to defend the naira. The need to diversify the economy is key, but if we stay on course and give all the support to the government, it is achievable. We can be firm and consolidate as the government did in the past on the issue of cement.”

Meanwhile the upper chamber has directed its Committee on Loan and Foreign Debt to look into the request by the Edo State Governor, through President Muhammadu Buhari, for a loan $75 million facility.

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