How corrupt politicians contribute to the declining value of the naira

Over the past year as a result of the CBN’s decision to float the Naira, our local currency has been on a roller coaster ride with the Naira losing significant value in the process along with its consequent negative effect on the economy. Even though the value of the Naira was expected to fall as a result of the floating, not even our most pessimistic analysts expected it to fall as low as it did before the CBN intervened to defend the Naira.

Even though the floating of the Naira was a step in the right direction, the implementation was abysmal as the CBN failed to put policies in place to stimulate increased foreign exchange inflows while nothing was done to curb the high and unnecessary demand for foreign exchange in the country. Also in a move that left all observers dumbfounded, they lifted the ban placed on accessing forex from the CBN for 40 items that had been previously banned by the CBN and thus increased the demand for foreign exchange when they should have been working to reduce it.

Due to their poor planning and execution, the CBN had bungled the floating of the Naira policy and instead of addressing the root causes of the high devaluation of the Naira, they decided to look for a scapegoat to blame the same way they did under the leadership of Emefiele and blamed Aboki Fx for the fall of the Naira when our local currency was losing value during the Buhari administration.

This time around they decided to make a popular cryptocurrency trading platform, Binance their scapegoat and even went ahead to arrest two of their executives who came to the country to honor the EFCC’s invitation to their organization and shed more light on Binance’s operations in Nigeria.

While it may be argued that the cryptocurrency trading platform was used to circumvent our foreign exchange trading regulations, one is at a loss why the company’s executives who came to the country voluntarily at the invitation of the EFCC should be arrested and detained without any charges against them while turning a blind eye to the real users of the platform who are the ones breaching our forex regulations.

The uncomfortable truth is that most of the people behind the huge demand for the dollar which makes the Naira keep tumbling are powerful politicians and civil servants who find it more convenient to keep their looted funds outside the country. Knowing that if they kept their proceeds of corruption in local banks the money could be easily traced and reclaimed, these powerful politicians prefer to use the proceeds to buy real estate both within the country and outside of it and what they choose to keep in cash is converted to foreign currency and kept in safe havens overseas.

Given the unprecedented level of corruption that the country has been subjected to over the past few years, our politicians and civil servants now have a lot more cash at their disposal to buy more dollars and put the Naira under increased pressure and as a result of this, the local currency has been on the receiving end.

The current case of Yahaya Bello, the immediate past governor of Kogi State being pursued by the EFCC sheds more light on how our politicians are putting excessive pressure on the Naira. According to the EFCC, $845,000 was paid upfront to American International School Abuja for his children’s school fees which was meant to cover his children’s school fees for ten years.

The EFCC further stated that the dollars were sourced from a local bureau de change with payment for it coming directly from the state government account. While this a flagrant case of stealing which the EFCC is currently addressing, it also exposes how our politicians put pressure on the Naira with their voracious appetite for foreign exchange funded by trillions of stolen Naira to the disadvantage of our local currency. While the case of Yahaya Bello is mind-boggling, we know that it is only the tip of the iceberg and there are far bigger heists being perpetuated by our politicians across the country daily.

It is also curious that despite our laws that prohibit the sale of goods and services in foreign currencies in Nigeria as it amounts to an abuse of the Naira, the EFCC failed to prosecute the American International School for breaching our laws while going after clowns like Bobrisky and Cubana chief priest for lesser abuse of the Naira offenses.

Could this be another case of selective justice as it’s clear that organizations in Nigeria that charge in foreign currencies for their goods and services are not only abusing the Naira, they are adding to the pressure on the Naira when they force their customers/clients to source for dollars to pay for their goods/services?

It is doubtful whether this administration is serious about fighting corruption but if they are really serious about stabilizing the exchange rate of the Naira, they not only need to put corruption in check, but they also need to make massive cuts in government expenditures and put an end to deficit financing while more funds are channeled to the productive sector of the economy to help increase local production and reduce our dependence on imported goods.

Oshobi, a development economist, management consultant, and author writes from Lagos.