Naira redesign and treasury looters dollarisation gimmick

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Nigeria’s foreign exchange market is in turmoil. The predicted stampede expected to follow the plan by the Central Bank of Nigeria (CBN) to redesign the naira has thrown the market into confusion. Treasury looters are scrambling to dollarise their loots.

The naira plunged last week to an abysmal exchange rate of N870 to the dollar, and might hit the N1, 000 mark if appropriate steps are not taken to halt the frenzied conversion of stolen money into hard currencies.

Treasury looters pre-empted plans by the Economic and Financial Crimes Commission (EFCC) to besiege the market before they could raid it in a desperate bid to convert stolen naira into hard currencies.

Everyone knows that those whose annual income is not up to N10 million would raise eye brows when they deposit billions of naira in their accounts during the conversion to the new notes. They are bent on avoiding that scenario and the exchange rate of the naira is paying the price for the treacherous behavior of treasury looters and the deceptive operators of Nigeria’s 6, 000 bureau de change (BDCs) who are willing collaborators.

EFCC acted rather too late to halt the stampeded conversion of naira into hard currencies by treasury looters. The agency rightly predicted the stampede but did not lay the siege in time to pre-empt the looters conversion of their looted naira to dollars.

Last week the thief catchers in EFCC arrested scores of BDC operators for collaborating with treasury looters by selling hard currencies to them when they have no legitimate transactions to carry out. The problem is that the damage has been done and it might be practically impossible to reverse it.

Unlike banks, BDC operators’ transactions are informal. They do not keep records of the transactions and they have no business demanding from their clients what they want to do with the forex obtained.

Consequently, even if the ones arrested by the EFCC are prosecuted for the breach, the dollars they sold to treasury looters may never be recovered because they have no records and have no way of tracking those who patronize them.

Nevertheless, even as the damage has already been done, the thief catchers in EFCC should not be discouraged. There are still more thieves to catch. Many more treasury looters are yet to convert their loots to dollars and are still eyeing the foreign exchange market with their loots.

This is not the time for EFCC to relax. The agency should place BDC operators on round the clock scrutiny to halt the stampeded raid on the foreign exchange market by treasury looters.

The gains of the plan to redesign the naira are simply too numerous and overwhelming to ignore. Nigeria is senselessly operating a cash economy at a time when the world has switched to electronic transactions. Two weeks ago, a gas retail shop went up in flames in Lagos and the consequent conflagration consumed the home of a cow dealer next to the gas retail shop.

The cow dealer was close to committing suicide because of the losses to the fire. He lamented that he sold five cows at N300, 000 each and stored the cash from the sales in his house. The sum of N1.5 million was reduced to ashes by the conflagration.

If the cow dealer had a bank account and ordered his clients to pay through electronic transfers, the money would be safe in the bank even as the fire razed down his house. Now he has lost the huge sum to fire by imprudently keeping the money at home. He probably used charms to protect the money from robbers, but the charms could not protect the money from fire.

The CBN’s move to redesign the naira is a laudable venture. No economy operates seamlessly in the 21st century with mountains of cash in private homes. It is simply impossible for the monetary authorities to control liquidity and consequently tame inflation and exchange rate manipulation by treacherous BDC operators.

Those who oppose the laudable plan are doing so either out of ignorance or prejudice. The CBN should step up its enlightenment campaign to let people know the dangers of having 80 per cent of currency in circulation tucked away in private homes.

Besides robbing the monetary authorities of the liquidity control leverage, it starves the banks of funds that could be loaned to the business community to create jobs.

EFCC has a very critical role to play if the naira redesign plan must attain the needed goal. The thief catchers in EFCC must not wait for banks to report treasury looters who deposit billions of naira in their accounts during the conversion exercise.

Experience has shown that banks are willing collaborators with treasury looters. They will never report the loots being deposited with them.

The truth is that banks managers get their cuts from the loots. They will never report such crime to the appropriate authorities.

The current situation is an emergency that should not be treated with kid gloves. EFCC will never know the looters if it waits for banks to report them.

The huge sums in private homes were withdrawn illegally from banks without the knowledge of EFCC. They could be smuggled back into the banks without EFCC’S knowledge. The banks have not changed their treacherous way of collaborating with treasury looters.

EFCC must break the rules and station its operatives in banking halls to monitor cash deposits on daily basis. Every depositor with outrageous sums beyond his means of livelihood should be compelled to explain how he acquired what he is depositing.

Failure to convince the operatives on the source of the money should attract instant arrest and further investigation into the source of the loot.

If such measure forces the looters to keep the money at home, Nigeria will still benefit from that. It will dry up the naira rain forcing the nation’s currency into a disorderly retreat in the forex market.

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