Forex restrictions trigger boost in currency trafficking

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Restrictions of foreign exchange by the Central Bank of Nigeria’s (CBN)  have led to a significant leap in the trafficking of foreign currencies across the country’s borders.

Findings in the foreign exchange market show that since the introduction of the restrictive policies desperate importers who seek alternative ways to remit funds to their suppliers, have resorted to taking out foreign currencies across land borders and through the airports.

Findings revealed that though, only a few importers were initially carrying out such transfers, their numbers have increased in recent weeks after it increasingly became clear that the apex bank was not going to review the policies.

Some of the currency smugglers have developed various means of taking money out of Nigeria. About a week ago, the National Drug Law Enforcement Agency (NDLEA) had arrested a Bureau De Change (BDC) operator and five others for swallowing $156,000 with the intention of smuggling it out of the country. The six suspects were arrested in a Lagos hotel while swallowing the cash, which they had planned to smuggle to Brazil.

A dealer in the BDC segment of the forex market, who declined to be named, said more importers were taking foreign currencies outside the country because they had found various methods of beating security officials.

He said: “You know that the average Nigerian can be quite determined to have his way, especially when the issue involves money. I can tell you that many people who are taking dollars outside the country are no longer scared of being caught. We hear that this is because the security agents have now become very cooperative and even when an importer is caught, he always finds a way of reaching a settlement with them, which will allow him to still take out the funds.”

According to report by Reuters last week, the measures had forced firms to use informal “transfer markets”, whereby people abroad wire dollars on a company’s behalf at exchange rates that are well below the official rate to the dollar. It also reported that some executives now carry bags of foreign currencies in cash to deposit in neighbouring countries.

The CBN recently alerted the nation over massive smuggling of foreign currencies out of the country through the country’s borders.

This followed the restrictions placed on importers of rice and other non-essential items from accessing foreign exchange from the nation’s foreign exchange market.

The apex bank which made the revelation of the unwholesome practice to frustrate its policy of conserving foreign exchange in the country said that it has taken steps, working with other agencies of the federal government, to stop the illegality and punish those involved.

“The apex bank has noted the unwholesome practice of movements of huge foreign currency cash across Nigerian borders by individuals and corporate bodies without compliance to extant law of declaration to the appropriate authorities. The Bank is already collaborating with other relevant agencies of government to ensure compliance to the provisions of the law”, CBN said in a statement.

In a statement by the Director of Trade and Exchange, Olakanmi Gbadamosi, Bureaux de Change operators could sell foreign exchange worth $5,000 per transaction but only for specific payments.

 

AUTHOR:  Simeon Damilola

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