While briefing journalists on the outcome of the 234th Monetary Policy Committee meeting, recently, governor of the Central Bank of Nigeria MalamSanusiLamidoSanusi noted the strong foreign exchange demand pressures coming in the domestic economy which were not linked to an increase in the importation of goods and services. He linked the heavy demand for the United States dollars especially to the activities of politicians who were rapidly dollarising the economy. To stem this tide, he said, the apex bank would soon adopt new regulations to fight money laundering in the bureaux des change (BDC) segment of the financial services sector.
The CBN has subsequently banned importation of the dollar into the country without its permission. But it is known that most BDCs place calls at the high rate for dollars. Yet when they get these dollars they would not give account of the equipment or resources procured with them or the commercial venture they expended them on. There is something wrong with BDCs buying hundreds of millions of dollars and not being able to account for them. We know that these moneys are not being used for importation of goods and services; many BDCs have become conduits for money-laundering activities, which the CBN would have to deal with.
There is evidence of a correlation in the demand for non-import-related dollars and political activities in the country, even though politicking now negates the Electoral Act. The increasing resort to dollarisation of the economy by the politicians lays bare the argument for the re-decimalisation of the currency that was jettisoned in the past. It exposes the deteriorating nature of the country's currency. A situation where the dollar is now a pilot currency and Nigeria becomes the biggest importer of US dollars is unacceptable. Dollarisation is typically preceded by high inflation, followed by hyperinflation as in the Zimbabwean misadventure. Gradually, businesses lose lines of credit to recapitalise, and there is limited access to foreign currency to procure required resources. These factors all lead to delivery of substandard goods and services and a reduction in output.
As the primary regulator of the financial sector, the CBN should decisively deal with this abnormality. If it continues unchecked, even the most basic needs of life will be dollarised. Politicians prefer the dollar because it is easier to carry for money laundering and bribery purposes. Prof. Chukwuma Soludo as CBN governor had thought the naira was weak and wanted it re-decimalised in 2007. The political class stopped him because they said the action violated section 19, sub-section 1 and 2 of the CBN Act. Since the CBN Act guarantees the CBN absolute autonomy in monetary matters, Sanusi should not allow politicians to derail him. It is the corruptive tendency of having N5, 000 notes that made Nigerians shout it down. Dollarisation of the economy is a greater evil.