The stolen money converted into dollars is eventually transferred abroad for investment in property markets. Treasury looters now raid the parallel market with naira proceeds of their loots, buy available dollars at ridiculously low naira exchange rates and dump the dollar proceeds in their domiciliary accounts. CBN officials contend that the new monetary policy instrument weapon emanated from established fact that domiciliary accounts have become useful tools for money laundering. This time operators of domiciliary accounts were the targets of the new instrument.ĬBN banned customer-to-customer transfer of forex by domiciliary account operators. Two weeks ago the apex bank added yet another monetary policy instrument to its arsenal in the war to stabilise the tottering naira. Its ineptitude in the campaign against naira depreciation with such monetary policy instruments emanates from the fact that the parallel market presents a flourishing market for the proceeds of Form-M fraud. The CBN is doing that battle with its hands tied to the back. Currently, an importer who is able to obtain an additional $1 million from inflated import bill, sells the excess in the parallel market at a mouth-watering gain of N100 million. The excess is sold in the parallel market at an attractive margin. Since forex is almost always scarce, the importer at times bid for two or three times what is needed to settle his import bills. The importer buys forex at an official rate which at the moment is about N100 less than the parallel market rate. That is primarily what encourages over-invoicing and other Form-M frauds. There is always an attractive margin between the official and parallel market rates. At the best of times Nigeria operates a minimum of three exchange rates. Ironically, over-invoicing thrives on the multiple exchange rates operated by the CBN. It provided dealers with products price verification mechanism (PPVM) that would guide them in determining the authenticity of prices quoted by importers in their Form-M.Įconomy watchers contend that 90 per cent of Nigeria’s billionaires made their money through manipulation of Form-M and dubious over-invoicing which give them access to two or three times the amount of forex needed for settlement of a particular import bill. It directed that Form-M, a vital document for settlement of import bills, be routed directly to ultimate suppliers of goods and services and not through agents. In August 2020, the CBN took its monetary policy instrument campaign against the depreciation of the naira to the fortress of Nigeria’s Form-M billionaires. The apex bank has apparently been compelled to take on targets that had all along been ignored probably because of the mega criminals involved. The Central Bank of Nigeria (CBN) is desperate and seemingly frustrated by the ineptitude of its monetary policy instruments as weapons against intractable depreciation of the naira.
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