Even before the formal
announcement of a recession by the Federal Government, most economists were of
the view that the economy was headed in that direction. All the economic
indices were negative and getting progressively worse from the first quarter
right through the second quarter. Now the economy has contracted by 2.6 per
cent. Given that scenario, and the vital role which the nation’s banks will
have to play in any possible recovery, the CBN should have exhausted all
options before taking the drastic action to bar over half of our commercial
banks from the foreign exchange market at once. It became counter-productive.
Eight banks in search of $1.77bn to remit immediately drove up the exchange
rate to more than N500/US$1.
Who can benefit from that?
UBA should not even have been included in the list. The bank’s protest and its
immediate return to the forex market pointed to a hasty decision. Secondly, the
CBN had just recently taken steps to save Skye Bank from imminent crisis. The
bank needs all the restoration of public confidence it can get. Banishing it
publicly from the foreign exchange market would deepen its woes and create
collateral damage in the inter-bank market. Granted, the banks failed to remit
about $1.77bn NNPC’s funds to the Treasury Single Account (TSA) when instructed
to do so. But, the TSA introduction was a sudden policy change, which caught
all the banks unawares. The immediate withdrawal ordered was simply not totally
feasible given the scarcity of dollars which had characterised the Nigerian
economy since 2015.
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