DIVERSION OF DIASPORA REMITTANCES DEVALUING NAIRA - CBN

The National Bank of Nigeria (CBN) has ascribed the drop of the naira against the dollar to the redirection of diaspora settlements to the parallel market.

Folashodun Shonubi, CBN acting Governor, talked while conveying a talk named 'Diaspora Remittances and Nigeria Economic Development' at the National Institute for Security Studies in Abuja.

TheCable had detailed that the naira tumbled to an unsurpassed low of N950/$ at the equal/underground market on Thursday — two months after the currency's float.

In the interim, at the investors and exporters (I&E) window, the naira appreciated somewhat by 0.13 percent to close at N781.34/$.

Talking at the occasion, Shonubi said a great deal of diaspora settlements showed up in Nigeria in dollars and end up in the equal market without being formally recorded.

“With those remittances, the dollars have come in, we know the dollars have come in but we don’t see them in the official system. So, they must be going somewhere and somewhere,” Shonubi said.

“And the challenge with the black market, unofficial market or parallel market or whatever name you want to call it, it is not regulated, and it becomes an easy place to have criminal activities.

“We investigate bankers, not just bankers, anybody who has committed an offense, the first thing they want to do is to run to the black markets, change it to the dollars because it is less money to carry around.

“Some of the funding in the black markets are actually from diaspora remittances. That’s why it important we need to know a lot of what’s going on there.

“We can’t play the sentiment game. If we don’t understand the dynamics, we usually go with the literature which does not necessarily work for us

Shonubi said how much inflows coming through numerous unapproved channels and in the long run winding up in the equal market contributed altogether to Nigeria's Forex (FX) emergency.

He said that carrying out measures inside the country to oversee illegal remittances and distinguish these channels would be advantageous.

This, he said, would guarantee settlement streams into the legitimate channels, and tackle most extreme advantages to develop the economy.

“We talk about black markets, which also create their own problems. Management of the foreign exchange market and the efficacy of our policies to manage the exchange rate becomes difficult due to the insignificance of our diaspora remittances which are going to other markets,” the CBN Man said.

"Today, somebody called me secretly and said that this thing (naira) has gone dependent upon certain levels in the bootleg trades, my inquiry was, what do you believe I should do? Do I work in the underground markets? I don't have a clue about the premise of evaluating in the bootleg trades.

“The other thing people don’t realise is that, because you don’t have full information, and I will give you an example since we started the I&E window. We found out that some people would deliberately wait until the last minute and do one transaction of $5,000 and that becomes the closing rate

"We can't manage without diaspora settlements. For some nations, that is their fundamental type of revenue."