Dr. Obadiah Mailafia


A former Deputy Governor of the Central Bank of Nigeria, Dr. Obadiah Mailafia, says commercial banks in the country cannot be trusted with forex sales, adding that they will “corner” the dollars and only release whatever that is left after satisfying their interest.

He spoke on Wednesday while featuring on PUNCH Online interview program, The Roundtable.

The PUNCH had earlier reported that CBN Governor, Godwin Emefiele, on Tuesday, said Bureau de Change Operators in the country are greedy and make abnormal profit from forex sales.

Emefiele also announced the discontinuation of and new license approval after the Monetary Policy Committee’s two-day meeting in Abuja.

The CBN had been supplying each licensed BDCs $20,000 per week at the rate of N393 with the instruction that they should sell with a margin of N2 but some of them sell as high as N505, making over N100 on every dollar sold.

According to Emefiele, BDC operators in the country continue to abuse the privilege, hence, the need to stop forex sales to them.

The CBN governor said commercial banks would be monitored to provide forex for the legitimate use of Nigerians.

But Mailafia said commercial banks cannot be trusted and would sell the dollar at any rate they wish.

“How can you totally trust these commercial banks because most of them will want to corner the dollar for themselves and whatever is left, then they can now share with the market at a rate they want?” he queried on PUNCH Roundtable.

The former deputy governor of the apex bank also said, “On the naira, it is not just the underlying economic fundamentals that matters like interest rate, inflation and so on, these things matter and the level of debt affect it but there are the non-quantifiable elements like violence, instability, rural banditry and terrorism, those things undermine the productive capacity of the economy. They also destroy social capital, the trust that holds the community together to do businesses together.

“If we are not careful, that decision will actually worsen the naira value because the BDCs, you could walk into any of them anywhere and within five minutes, they will attend to you but the banks, you have to drive to your nearest bank, you have to queue most of the time.

“The CBN has not told us the rate, the banks will want to make a profit over the official rate, we don’t know whether they will make a decent profit or they will profiteer. Bankers were the biggest experts in round-tripping. Old habits, I don’t think they change. Leopards are very unlikely to change their spots.

“So, we may end up in a scenario where there is scarcity and the simple economics of demand and supply tells you that where there is increase scarcity, price is likely to shoot up.

“If bank bureaucracy makes it difficult for people to access dollar, what it means is that the bureaucracies, obstacles, and bottlenecks are likely to put pressure on supply, and pressure on supply may mean an increase in demand for the dollar and greater fall of the naira if we don’t play the cards well.”

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