ECONOMY: Why the CBN Blame-game in the Naira Devaluation: Unmasking Policy Self-sabotage in the Forex Crisis (Part 1) – Barrister Emmanuel Ogebe


“To fully comprehend the insanity of this action, kindly consider the following: NNPC’s monthly forex payment to CBN dropped from $3Billion to just $300Million (10%) whereas Nigeria needs $1.8Billion monthly for debt service and $4.6Billion for importers.”

*Acting CBN Governor Folashodun Shonubi


Recently, Nigeria has experienced an almost 100% per cent decline in the naira’s value compared to the 471/dollar rate which the national currency previously closed at in the I&E Window, Data from the FMDQ Exchange showed.

However I read with consternation an absurd claim by the acting CBN Governor that Diaspora remittances are to blame for the record-breaking high exchange rate of $1=N950 at the parallel market.

It appears that the era of blame game Olympics continues in Nigeria’s mis-governance. They can’t blame the previous APC government, so they chose hardworking Nigerians abroad as scapegoat for their wrong actions.

According to media reports, he said, “Some of the funding in the black markets are actually from diaspora remittances. That’s why it important we need to know a lot of what’s going on there. We can’t play the sentiment game…

How can he blame Diaspora remittances which has existed for decades as being responsible for the massive devaluation of the naira that occurred under the current two-month-old regime?

For the avoidance of doubt, Diaspora remittances was identified and instituted as a strategic forex acquisition policy by Anthony Ani, Abacha’s Minister of Finance in the 90s.

“Re: $26bn Diaspora remittances: Where are the dollars? …Anthony Ani

The above question was posed in an article in The PUNCH newspaper edition of September 9, 2019, by columnist Henry Boyo.

There is a need to discuss this issue, as it appears that there is massive foreign exchange laundering going on in our banks.

As the architect of the Diaspora remittances in 1996, I am naturally concerned at the abuses disclosed by Boyo.

When in 1995, we at the Ministry of Finance reviewed the country’s sources of foreign revenues, we found out that nothing was coming in from Nigerians in the Diaspora, whereas India and Jamaica were living on foreign exchange from their citizens abroad.

When I enquired why Western Union and MoneyGram could not receive money from Nigerians abroad, I was told that it was due to our tax laws.

The question then to me was why income “brought into” India was not taxed in India? On enquiry, I found that India had modified its tax laws to accommodate its citizens living abroad who wanted to send money in foreign exchange to India.

In 1996, I had proposed (and it was accepted by the Federal Executive Council) in a new law, regarding Nigerians repatriating remuneration from abroad, Nigerians repatriating dividends, royalties, fees, commissions from foreign countries receipts by authors, sportsmen/women, musicians, play writers, artist, etc.

Such income repatriated into Nigeria in foreign currency was 100 per cent exempted from tax, provided the foreign currency was repatriated through a domiciliary account with a Nigerian bank!

In 1996, Nigerians abroad repatriated about $4.5bn (about 50 per cent of our gross revenue from oil) and we ensured that these amounts were brought into Nigeria, intact, in foreign exchange.

The receipts helped to stabilize our exchange rate mechanism at N82 to a dollar, throughout my tenure as the Minister of Finance, to the extent that the naira was internally convertible currency.”

We therefore see from above that Diaspora remittances was a targeted government initiative with friendly government laws that went from $0 to $4.5 Billion (half of oil income) in one year with the naira stable at 82=$1.

Per a US-Diaspora columnist, “In 2018, Nigeria’s diaspora remittances rose to U.S.$25 billion, up from $22 billion in 2017.

“These numbers are the highest in sub-Saharan Africa. As Andrew Nevin, the chief economist at PriceWaterCoopers (PwC) Nigeria, explained, this makes *Nigerians abroad the country’s biggest export!*.

Professor Nevin observed that the 2018 figure represented 6.1 per cent of Nigeria’s Gross Domestic Product (GDP) and *translated to 83 per cent of the federal budget*. It is also seven times larger than the net Official Development Assistance received that year, at $3.359 billion.

The meaning of this? “*Nigeria’s biggest export is not oil; it is actually people, because of the remittances coming in*,” he said.

The good professor is right. But even he did not recognise how understated he was: the contributions of Nigerians in the Diaspora are probably twice or triple the numbers that Diaspora remittances can reflect.

Those remittances, by their nature, measure only sums of cash dispatched to Nigeria through direct, traceable links. But by our nature as Africans, the electronic part of us is still in its infancy. We send, but not simply money. We send goods that are not captured under those calculations. We send medications, clothes, toys, food, etc.

And we send money to relatives and friends directly through other relatives and friends. We spend money on relatives and friends through accounts in Nigerian banks.

In the years in which I have lived in the United States, I have met professionals in several fields who tell stories of various pieces of equipment they sent to their former schools and even schools they are not affiliated with, as well as hospitals. In a country in which governments abdicate responsibility for education, some of these organisations even build entire school blocks.

But remember: some of these Diaspora contributors who are upholding entire families — and therefore Nigeria — by buying books, paying school fees, rents, hospital bills and the like, are not always university professors or doctors or businessmen, but cleaners and sweepers…even sex workers.

Some of them are in the bowels and fires of Libya and Italy and Brazil and India and Malaysia and South Africa. Some of them cannot even visit their parents or children because they lack official documentation where they are.

One final point. Despite annual contributions to the Nigerian economy that are far closer to $50 billion than $25 billion in remittances, no Nigerian abroad has a vote in the nation’s elections because politicians fear that voting bloc. But to quote Mr. Nevin again, “Nigeria’s biggest export is not oil; it is actually people.”

(Bill Gates said) government (should) invests in human capital. Not politics. Not rhetoric. Not games. Not lip service. People!!!”- SONALA OLUMHENSE, Columnist.

I can attest to the higher undocumented value of Diaspora contribution because in two humanitarian airlifts from the US, I donated medications worth about $3million to Nigeria in addition to about 200 mission trips in 25 years.

However recently I wrote to NIDCOM on Diaspora Day 2023 thus, “Disruption of Diaspora $22Billion Remittances

I am concerned at recent policy reversals that threaten to negatively impact Diaspora remittances which have become a staple stabilizer of the Naira value.

As stated in my prior letter to you, “Nigerians in Diaspora have in recent times remitted more money to the national economy than Nigeria’s oil production.
Besides that, the Diaspora’s multi-billion-dollar annual remittances have historically been a stabilizing factor that mitigate the capital flight induced by corruption over the years. In short, our forex remittances is the life blood transfusion that has stemmed the financial hemorrhaging by “lootocrats”.
The Nigerian government has borrowed money from the Diaspora by means of the Diaspora Bond.

Similarly the (Buhari) regime in which you serve introduced a policy to incentivize more forex influx from Diaspora by CBN paying five naira for each dollar sent. This temporary policy was so lucrative that the Central Bank extended it indefinitely and remittances even exceeded oil export revenues. In February 2022, Central Bank of Nigeria claimed that diaspora remittances surged by 1,566.6%, accounting for a sizable portion of the CBN’s daily dollar receipts, from $6 million weekly to $100 million since the launch of the Naira-to-dollar promo Read more:

While Nigeria is unable to meet its OPEC oil production quota, Nigerians in Diaspora continue to remit funds despite pandemic and war-induced inflation and recession.”

You can therefore imagine my shock that the new Tinubu administration CANCELLED the CBNs Naira-for-dollar incentivization policy effective July 1, 2023.

To fully comprehend the insanity of this action, kindly consider the following: NNPC’s monthly forex payment to CBN dropped from $3Billion to just $300Million (10%) whereas Nigeria needs $1.8Billion monthly for debt service and $4.6Billion for importers.

Diaspora remittances, investors & FDI account for 10% of Nigeria’s forex inflow. While manufacturers waited 3-4 years for forex allocation, cronies collected CBN forex daily to resell and become instant billionaires by abuse of the multiple exchange rates.

Although dual exchange rates have been abolished, the issue here now is that the $100million weekly ($400 per month) Diaspora remittances which augmented the paltry $300million remitted by NNPC by 130% is now at risk of falling to the pre-Naira-to-dollar promo rate of just $6million weekly ($24million monthly.) This cannot be the right direction Nigeria needs right now.”

In this sorry state of affairs, the role of diaspora remittances should be even more critical to the national economy than to be abruptly disrupted and endangered by this unfortunate policy reversal. Indeed NIDCOM had been very appreciative and supportive of the Diaspora Remittance incentive.

If Diaspora remitted $21.9 Billion last year, that means our recipients in Nigeria received N100Billion based on the Naira incentive program.
If CBN spent less than N80Billlion on Diaspora incentive in 2021 to generate $20Billion but Nigerian National Petroleum Company spent N788.7bilion on administrative expenses in 2021 to remit less than $1.5B to CBN, then Diaspora is a better investment for Nigeria than investment in NNPC.

This is an increase from N648.6 billion reported in 2020, bringing NNPC’s total expenses to over N1.4 trillion in two years to produce about 15% of the forex that Diaspora generates while Nigeria only spent 15% of what NNPC consumes on Diaspora incentive.

By the way, NNPC administrative expenses included N13bn on staff entertainment, N20 billion for telephone calls and Postage within the two-year period. NNPC Ltd spent an average of N561.125 million every month (N18.447 million was spent daily) on entertainment between 2020 and 2021 and N768,664 hourly.
This is exactly why CBN spending five Naira to attract $1 from Diaspora remittances is a better investment than the $25 Billion purportedly spent on refineries to produce nothing.

  • To be continued

– Emmanuel Ogebe is a US-based lawyer and Nigeria international affairs expert with the U.S. Nigeria Law Group, Washington.

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