Despite CBN Market Forays, External Reserves Stand at $30.6bn

By Obinna Chima

Despite all the dollars pumped into the foreign exchange (FX) market by the Central Bank of Nigeria (CBN) since February 20when it announced its new FX policy measures, the country’s external reserves have remained relatively robust.
The reserves, derived primarily from crude oil earnings, increased from $29.282 billion as of February 20 to $30.586 billion as of April 19, according to data posted on the CBN’s website.

Similarly, initiatives taken by the central bank to commence sectoral FX interventions may have started yielding results, as the naira in the past few weeks also strengthened against other currencies and the greenback.
The naira rose to N380 to the dollar last week, from N410 in the preceding week.
Owing to the CBN’s foray into the market, operators of small and medium enterprises are beginning to heave a sigh of relief, as they have been granted special consideration for $20,000 each quarter to import essential and eligible raw materials and finished goods critical to their operations.
When contacted for comments on this development, the Bank’s spokesman, Isaac Okorafor, stated that the CBN has put in place measures to ease the difficulties encountered by small businesses.

He noted that while the Manufacturers Association of Nigeria (MAN) had acknowledged that the previous 60 per cent FX allocation had helped to raise capacity utilisation, they still canvassed for more dollars to be made available for real sector players in the small to medium scale category.
According to Okorafor, the CBN examined this request and found out that this category of industries was being crowded out of the FX market and therefore took steps to address their challenges.
On how this has affected the naira exchange rate, he said genuine SMEs no longer have to patronise or source FX from unofficial sources, thus reducing pressure on either Bureau de Change (BDC) or parallel market segments of the market.
For the umpteenth time, he urged all participants in the market to corporate with the CBN and abide by the regulatory guidelines in order to ensure hitch-free operations.
However, the central bank at the weekend said it received complaints from operators of small and medium businesses eligible for accessing FX from its new window that they were being frustrated by commercial banks.

To this end, Okorafor encouraged SMEs that had been denied access to FX to present evidence to the CBN. He stressed that the central bank would not fail to sanction any bank or even its chief executive that violates the rules on FX for SMEs.
“It has become necessary that we bring to your notice the complaints from customers, especially those who operate in the SME segment of the market that banks are frustrating their efforts at getting FX.

“You would recall that recently we introduced a window to give FX to SMEs, which incidentally are the engine of growth in our economy, for them to be able to obtain a small amount of FX. However we have received complaints that banks are frustrating them.
“We have reviewed all these complaints and found out that they do not have evidence. So we want to use this opportunity to appeal to customers of banks and the SMEs to give us concrete evidence against these banks so that we can hold them responsible by way of sanctions,” he added.