Business

Experts Disagree Over CBN New Forex Policy

Published

2 years ago

June 15, 2023

Experts have differed on the recent liberalisation of the foreign exchange (forex) market by the Central Bank of Nigeria (CBN).

The CBN had two days ago announced measures to liberalise the market including the elimination of multiple exchange rates, and freedom for banks to buy and sell foreign exchange at any rate based on a willing buyer and willing seller arrangement.

Reacting to this development Dr Muda Yusuf, Chief Executive Officer, the Centre for the Promotion of Private Enterprise (CPPE), said that the liberalization of the foreign exchange (forex) market would unlock huge potential for investment and boost government revenue by N4 trillion through additional remittance of exchange rate surplus to the federation account by CBN.

But in his reaction, Taiwo Oyedele, Africa Tax Leader, PricewaterhouseCoopers PwC, slidely disagreed, saying though the development is a positive one that can lead to improvement in the sovereign rating of the country, it will lead to rise in government debt and cost of servicing the debt.

Dr Yusuf said on the CBN policy: “The liberalization of the foreign exchange (forex) market would unlock the huge potentials for investment, jobs and capital flows. Investors’ confidence would be positively impacted.

“Meanwhile, it should be clarified that this is not a devaluation policy, but a pricing mechanism that reflects the demand and supply fundamentals in the forex market.

“It is a framework which allows for flexible rate adjustments as and when necessary. It is a model that is predictable, equitable, transparent and sustainable. It is a policy regime that would reduce uncertainty and inspire the confidence of investors. It would minimize discretion and arbitrage in the forex allocation mechanism.

“Rate unification does not imply that rates will be exactly the same in all segments of the market. The objective is to ensure that the differentials are very minimal, possibly between 5-10%.

“A unified exchange rate regime offers the following benefits for the economy: It enhances liquidity in the forex market; reduces uncertainty in the market and therefore enhances the confidence of investors; more transparent as a mechanism for forex allocation; minimizes discretion in the allocation of forex and reduces corruption vulnerabilities; and reduces opportunities for round tripping and other sharp practices.”

Other benefits he listed are: “It would increase disclosures with respect to export proceeds and compliance with non-oil export declarations, especially the non-oil export documentation; boost government revenue by a minimum of N4 trillion through additional remittance of exchange rate surplus to the federation account by CBN; use of naira cards for limited international transactions would be restored in the short to medium term; would facilitate the mopping up of naira liquidity in the economy in the short to medium term. This would impact positively on inflation outlook; and deepen the autonomous forex market through the liberalization of inflows from Export Proceeds, Diaspora Remittances, Multinational oil companies, diplomatic missions etc.

“In the short term, we expect a depreciation of the currency in the official window because of the huge demand backlog. But as the market conditions normalize and move towards equilibrium, the rate would moderate. We also expect the new policy regime to boost inflows and strengthen the supply side amidst elevated investors’ confidence. The component of forex demand driven by arbitrage, rent seekers, speculators and other economic parasites would also fizzle out, thus restoring stability to the forex market.

“However, CBN should position itself for periodic intervention in the forex market, as and when necessary, to stabilize the exchange rate and prevent volatility. This should happen not by fixing rate, but by boosting supply to the extent that the reserves can support.”

But Oyedele reacted: “The major impacts will include: a significant rise in government debt in naira terms by about N12 trillion to N90 trillion i.e. external debt of $42 billion will increase by the difference between the old and new rates.

“As a result of the above, the debt to GDP ratio will increase by about 5%, There will be a corresponding increase in debt service cost with respect to foreign debt service.

“Government’s revenue will increase in naira terms resulting in a higher tax/revenue to GDP ratio. Corporate tax collection may however decline as many businesses crystallise forex losses due to the higher exchange rate.

“Possible reduction in budget deficit if government’s forex revenue exceeds foreign currency obligations, an increase in budget deficit will arise if otherwise”.

Oyedele however sounded a note of caution, saying: “Government needs to manage the dynamics to restore confidence. The backlog of forex demands needs to be addressed and the government should be ready to supply forex to stabilise the exchange rate in the short term.

“Also relax capital control and administrative bottlenecks including unbanning the list of items prohibited for FX (and complement with higher import duties), remove the need for a certificate of capital importation etc to prevent the parallel market rate from simply moving further away from the official market rate.

“The aggregate demand for FX across markets should reduce as round-tripping incentives are removed, for instance people who fake foreign travels just to get FX at discounted rates. “Also, Nigeria’s sovereign credit rating should improve if this is complemented with the right fiscal and monetary policies thereby attracting more FX inflows and lowering the cost of borrowing.”

Business

Dangote Fuel Sells Cheaper In Togo Than In Nigeria – Falana Laments

Published

3 days ago

September 15, 2025

Editor

Human rights activist Femi Falana, SAN, has lamented that fuel taken from Dangote is cheaper in Togo than in Nigeria.

Falana expressed his concerns on Sunday while responding to questions in an interview on Politics Today, a programme on Channels Television.

He urged the federal government to review the proposed 5 per cent fuel surcharge and ensure that further hardship is not imposed on Nigerians.

“I guess the government wants to go back to the drawing table and ensure that it is not accused of multiple taxes or double taxation because consumers will pay VAT for buying fuel. They will now put an additional 5 per cent tax.

“I think this is what Nigerians are complaining about. And from what we just read today is that the Dangote fuel taken from Nigeria is now cheaper in Togo than in Nigeria I think about 65 naira.

“So, the government will have to review these developments (the proposed 5 per cent fuel surcharge) and ensure more hardship is not imposed on Nigerians,” he said.

Business

Falana Reveals Those Behind Subsidy Removal

Published

3 days ago

September 15, 2025

Editor

A Senior Advocate of Nigeria, Femi Falana, has once again criticised President Bola Tinubu’s removal of the fuel subsidy.

Speaking in an interview on Sunday’s Politics, a programme on Channels Television, the human rights activist stated that no country in the world has completely abolished subsidies.

“There’s no way you can remove subsidy completely. No country in the entire world has abolished subsidies completely.

“Even leading Western countries like the United States, the United Kingdom, France and others subsidise electricity, agriculture, and many aspects of the lives of their people.

“So, when the Nigerian Government said it was removing subsidies, as a matter of fact, if I must say this, it was the World Bank and the International Monetary Fund, IMF, that insisted that the government must remove all subsidies,” he said.

Business

‘We Like Greek Gifts,’ Nigerians Blast NUPENG Over Dangote’s Fuel Price Reduction

Published

5 days ago

September 13, 2025

Editor

The decision of the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) to warn Nigerians against accepting Dangote Refinery’s recent fuel price reduction has drawn heavy backlash on social media, with many citizens mocking the union and embracing what they described as “much-needed relief.”

Dangote had announced lower petrol pump prices in several states alongside a new scheme to deploy compressed natural gas (CNG) trucks directly to filling stations, a move expected to reduce logistics costs.

But NUPENG dismissed the offer as a “Greek gift,” alleging that the refinery was undermining workers’ rights, sidelining the union, and pushing drivers into a rival association.

However, netizens have lambasted the union, querying that during hard times, NUPENG has never supported the masses.

On X (formerly Twitter), Nigerians quickly turned NUPENG’s warning into a trending topic, using humour and sarcasm to lampoon the union.

Oloye Somorin Osifeso (@OloyeSomorin) wrote: “We like Greek gifts in my garage.”

Just Jude (@JustJude) asked bluntly: “Is it your deception?”

Oladele (@Oladele) quipped: “As Dangote Refinery dey offer Nigerians Greek gift, why can’t NUPENG too offer Nigerians French gift?”

Agbalaka (@Agbalaka) queried: “Can they tell Nigerians what exactly they are fighting about?”

CBN Gov Akinsola (@Akinsola) joked: “Then give us Trojan gift now 😆. Man do man. Man no go vex.”

Omobalaji (@Omobalaji) teased: “NUPENG, oya surprise us with Arabian gifts.”

Habdulakeem Bahdmus (@BahdmusHabdulakeem) added: “If Dangote is showering Nigerians with Greek gift, NUPENG can also set up a Roman gift now.”

Femi Yekinni (@FemiYekinni) steered it back to reality: “We thank them for their advice. Now, @DangoteGroup pls how do we schedule deliveries to Badagry?”

Curtis Abbi (@CurtisAbbi) slammed the union: “Nigerians will manage the Greek gift. @officialNUPENG9, what gift have you given Nigerians in your entire years of existence? NUPENG should offer Nigerians their own Somalian gift 🤣.”

Akin Adejola (@AkinAdejola) echoed the sentiment: “LOL. I can bet Nigerians don’t mind the gift. NUPENG should gift Nigerians same ‘Greek gift’ too if they have any goodwill. NUPENG is the enemy of progress in the oil & gas sector.”

Adeola Akinwande (@adeolarewaju9) criticised union leaders: “Does NUPENG remember Nigerians at hard times? They have all failed Nigerians the same way the @NLCHeadquarters has failed. They are living big on unionism and cashing out big time. Without unionism, some of their excos are nobody. They should stop the crocodile tears.”

Okunwa U. U. Azikiwe (@OkunwaUUazikiwe) argued: “Competition has created jealousy by the previous monopoly in the sale of fuel. They have lost control, and it is paining them that they are no longer in control. SMH!!!”

Solihull Abdulkareem (@SolihullAbdul) chipped in: “NUPENG or whatever, do you want the market to be monopoly? You’ve been doing what you want for many years. It’s time for change, just accept it and move forward.”

Temidayo (@Temidayo) asked: “It’s a lie. What benefits has your union provided for Nigerians? Middlemen syndrome has been room for corruption. Your association should go and buy shares in Dangote and work together to make Nigeria great.”

And LegalTech Sam Akanbi (@SamAkanbi) summed up: “Nigerians no longer want your Nigerian gift, we want the Greek gift. If you have a better offer, we’d abandon Dangote’s Greek gift and take yours. But for now, let the Greek gift go round.”

Recall that NUPENG earlier alleged that Dangote Refinery was forcing truck drivers to abandon its union for a rival group, the Direct Trucking Company Drivers Association (DTCDA).

The union also accused Dangote of undermining collective bargaining rights and violating a Memorandum of Understanding (MoU) signed under government supervision.

Dangote, however, denies the claims, insisting that union membership remains voluntary and that its delivery scheme is designed to cut costs and ease supply.

The federal government has intervened, with the Ministry of Labour and the Department of State Services mediating between both parties.