Despite the federal government’s efforts to crack down on foreign exchange market speculation, the Nigerian currency, the naira, continued to depreciate in the parallel market. Government-led raids targeted Bureau De Change (BDC) operations in key cities like Abuja, Lagos, and Kano, resulting in several arrests.
However, these measures did not prevent the further decline of the naira, which saw it trading at 1,900 to the dollar in Abuja and Kano, and at 1,800 in Lagos, while the British Pound exchanged for 2,250. In contrast, the official market saw a slight improvement, with the naira strengthening to 1,551.24 from 1,574.62, according to the Nigerian Autonomous Foreign Exchange Market (NAFEM).
National Security Adviser Nuhu Ribadu had directed the crackdown, involving various law enforcement agencies, in response to the undermining of the Central Bank of Nigeria’s (CBN) attempts to stabilize the foreign exchange market and stimulate the economy. This action aimed to address the speculative activities that contribute to the naira’s depreciation, inflation, and economic instability.
Despite the formation of a 7,000-man special task force by the Economic and Financial Crimes Commission (EFCC) to combat dollar racketeering, illicit activities within the foreign exchange market persist. The government’s strategy includes a collaborative approach with the Nigeria Police Force, EFCC, Nigeria Customs Service, and Nigeria Financial Intelligence Unit (NFIU) to penalize those involved in market manipulations.
The clampdown, particularly in Lagos, led to the arrest of about five BDC operators and caused many unlicensed operators to flee. The action has sparked debate among experts and stakeholders. Economist Dr. Oluseye Ajuwon criticized the raids as an ineffective solution to the foreign exchange crisis, arguing that it could exacerbate the problem by pushing the market underground and making foreign exchange even more expensive.
To stabilize the forex market, experts suggest a comprehensive economic strategy that includes forex and monetary policies aimed at export diversification and attracting capital flows. The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has proposed pegging the dollar at a rate between 750 and 850 to address currency depreciation.
Meanwhile, the Association of Bureau De Change Operators of Nigeria (ABCON) condemned the activities of unlicensed operators and called for partnership with the government to tackle currency volatility. ABCON President Aminu Gwadabe highlighted the need for solutions that automate and digitize retail exchange to enhance monitoring and reporting of transactions.
The situation underscores the complexity of addressing foreign exchange market challenges in Nigeria, with calls for more effective and sustainable policy measures to ensure economic stability.
