The Central Bank of Nigeria Governor, Mr. Godwin Emefiele, in this interview after last week’s Monetary Policy Committee meeting spoke about activities in the foreign exchange market and the upcoming Central Bank Digital Currency, commonly known as the eNaira. James Emejo and Dike Onwuamaeze bring the excerpts:

There have been complaints that since the CBN stopped selling dollars to Bureau De Change (BDCs), the parallel market rate has been depreciating, what can you say about that and there are reports that the CBN is investigation Aboki Fx for certain FX infractions, how true is that?

My view is that number one, the only exchange rate that I recognise today in the Nigerian foreign exchange market which is the dominant market remains the Investors and Exporters (I&E) window which is the market that we expect everybody that wishes to procure foreign exchange or somebody who wants to sell foreign exchange – go to your bank, the I&E window will attend to you. I am sorry to say that I do not and I do not intend to recognise that there are any other rates in the market. And I will give you explanation. Eight weeks ago, we did stop the allocation of foreign exchange (FX) to the BDCs. Indeed, we began to ask ourselves why we waited for so long that we continued to do this. The reason is because Nigeria remains the only country on earth, the CBN remained the only central bank in the world as at eight weeks ago that would deep it’s hands into its reserves, our commonwealth and you pack dollars and begin to sell it to BDC operators in the market all in an attempt to stabilise FX rate in the market. Even when I was a regulated entity or I was running a regulated entity, that when exchange rate begins to go up at this so-called market, the central bank begins to call.

I remember a deputy governor in central bank calling me at Zenith Bank saying that can’t you see the black market rate is going up but we found out that your bank is not coming to take dollar to sell. Come and take dollar to sell and pump into the black market and the illegal market. That is what we in this country at central bank we decided to adopt as a way to stabilise exchange rate and for me it’s a wrong decision and we should really applaud ourselves that we decided that this will stop and it has stopped for good. The reason I say this is because the Bank of England does not sell dollar to BDC even though they exist. The Federal Reserve does not sell dollar to other FX dealers in the United States. Indeed, nobody talks about BDC rate in the streets of London; if you go to Oxford Circus, the exchange rate that a BDC operator will give to you on Oxford Circus is certainly different from the rate that a BDC will give you if you are in Camden area of London.

Yet, nobody ever mentions the rate of BDC in the city of London. So it really beats my imagination that Nigeria carried on with this kind of practice that tended to support illegal activities of people who are involved in graft and involved in corrupt practices. What do they do? Instead of collecting naira as bribe, you tell the person to exchange it to dollar so that you can have small packets of dollars in your pocket. And yet, the CBN in an attempt to moderate rates in that market decided that it would take dollars from our reserves and begin to support the corrupt tendencies of people. Or is it even through its activity that we have unwittingly support led activities of those who illegally buy foreign exchange from this illegal market, carry them in aircraft out of the country and go to buy arms and ammunition and bring them back into the country and conduct crime – whether it is Boko Haram, kidnapping or all sorts of nefarious activities. We, the central bank take our country’s dollar and sell to people to go and but arms and ammunition to come out and hurt us. That’s what we are seeing and people want us to continue to do. We cannot do that any longer. What we are saying is that if you have any legal, legitimate business you want to conduct, please, take your business to the bank. You want to travel, go to your bank they will sell you FX, you want to pay school fees, go to your bank, they will sell you FX, pay medical bills, which are some of the reasons people give for going to BDC, please go to your bank.

Indeed, I want to put it in record; if the amount you want is even above the limit that is recognised and we find that the reason you are making those demands is legitimate, you bank will speak to us and we will give you more than what is even the limit. Don’t go elsewhere, go to your bank. In the same vein, you have dollar to sell, go to your bank. We don’t recognise and we will not see it again. That is our position. And people are saying banks are not selling – we will continue to monitor the banks and I have said it that if anybody sees a bank, you go to your bank and they don’t sell to you; we advertised our emails, our hotlines and we said you should call the bank. Call us and we will intervene and ensure that bank sells to you. However, if you go to a bank with fake ticket, fake visa, fake passport, we have told them not to sell to you.

If they sell to you mistakenly because you hoodwinked them to sell to you and after two weeks they checked and found that you canceled your ticket or your visa is fake, they will call you because you are their customer; they have your BVN, they have your number – they will call you to return the dollar. If you do not return it they will place your name on their website, your BVN on their website and we will pick those details and we will send them to EFCC and other crime agencies and they will pursue you, you must return the dollar because you cannot acquire it illegally. That is our position. We conducted a study. One of the banks in one day sold to 52 people who said they wanted to travel. After two weeks they went to check, and 40 out of the 52 have canceled their tickets.

How could you have a situation where about 70 per cent or 80 per cent of people who went to a bank to buy BTA on the excuse that they wanted to travel, banks sold to them, but they turned and then went and sold it to black market because they wanted to enjoy the arbitrage. They were asked to return it and we are going to pursue you if you are involved in this nefarious activity. You want to do legitimate business, conduct a legitimate business and we will be with you. That is on bureau de change and we are not going to go there again. And Aboki FX, yes, unfortunately our colleagues here at CBN wrote a memo to banks and asked those banks to provide information about Aboki FX. We have been studying the activities of AbokiFx in the last two and a half years. There was a particular time I asked our colleagues to call the so-called owner of AbokiFx that we wanted to engage him to understand his model, his basis and how he came about advertising those rates. We found him as a Nigerian who lives in England, and conducts this nefarious and criminal activity on our economy. It is an economic sabotage and we will pursue him wherever he is. We will report him to international security agencies. We’ll track him, Mr. Oniwinde, we will find you, because we cannot allow you to continue to conduct an illegal activity that kills our economy. For your information, our preliminary findings revealed the following: First, let me make it clear that if you are running a legitimate business and following out rules at the central bank for use of financial system, there is nothing to worry about.

But for those who think they are smart and they want to continue to sabotage the efforts of the CBN in running this economy for the good of Nigerians and this government, we will make life very difficult for you, you time has come. We will continue to do our jobs of safeguarding the financial system for the betterment of everybody. Now, on AbokiFX, the company was registered in the UK in November 2015 and is owned by one person who claimed in his regular fillings that there are other people with significant interest in that business but he does not want to name them. So who are these significant persons behind him and why are they hiding? This is on UK filling records and we would go there and conduct those investigations. Since inception of this business he has continued to file the same account to the UK Government; the same £1,000 cash account – that is his balance sheet, that same £1,000 total assets…consecutively for four years.

Yet, here in Nigeria, he and the company have over 25 bank accounts with about eight banks in both naira and dollar with significant turnover also showing him simply milking the system through speculative information activities on the naira and collecting his proceeds in cash through a particular ATM in London. Our preliminary findings suggest that this website was built and is being used purely for purpose of foreign exchange manipulation and speculation. They get naira loans, use it to purchase dollars, take a position, change the rate over a given period, sell the dollars they purchased and make a profit. This is completely illegal, it is unacceptable and we will purse them. Another finding also showed that Mr. Oniwinde, the owner of AbokiFx is an illegal FX dealer. Between February 2020 and May 2021, he had inflowed and sold tens of millions of naira in FX to several Nigerian companies and we will find those companies as well.

In contravention of our FX laws because he is an illegal FX dealer, he directly benefits from the rates he quote daily on his website. We are finalising our investigation and must one, these companies that patronise him that they are also going to face out wrath. A few questions; has Nigerians ever asked how exactly AbokiFx collects his data that he publishes on his website? How many BDCs can claim that they have either seen a staff of AbokiFx coming to ask for daily rates or how many BDCs send daily returns on exchange rate to AbokiFx. How then do they determine what the rate is and they post them illegally on their website. In which other country will unlicenced single person be the one that sets exchange rate in that country? How come he sets exchange rate of our own country, and why is he not setting exchange rate of pound and dollar or pound and South African Rands or pound and Ghana cedis? Why target Nigeria, and yet you are a Nigerian? You chose to live in London, enjoy all the spoils in London at the expense of the blood of Nigerians. You will pay for it. The CBN Act Section 2, does make it clear that only the central bank can determine the value of the naira, and yet a single unscrupulous individual who lives in London continues to manipulate the exchange for Nigerians, continues to make huge profits, continues to collect these profits in cash ATMs in London while ordinary Nigerians suffer the consequences of these actions. We will not allow this to continue again…

At the CIBN meeting just a few days ago, you made an announcement on the establishment of the Nigerian International Financial Centre (NIFC), I would like that you provide an update on that and other projects that the CBN is spearheading such as the commodity exchange, the National Art Theatre and most recently, e-Naira?

Let me start with the e-naira side of it. Yes, e-naira is scheduled to be launched on October 1, 2021, and we have all the approvals and mandates to launch. But it is important to understand that the e-naira is not a one-off, it is a journey that starts on October 1. October 1 marks the beginning of e-naira journey. On October 1, a Nigerian should be able to download the e-naira app from either Google plays store or apple app store. On board themselves, fund their e-naira wallet using their bank account or with cash at a registered agent location and conduct transactions such as transfers and purchases at merchants outlets that have onboarded. Simply, let’s imagine that a bank has about N10 billion in its account, that is physical naira. We can decide to say out of the N10 billion, we move N2 billion into its electronic e-wallet for the bank. So, if you are a bank customer and you have say N10 million in the bank, for your comfort of spending and making purchase, you could tell the bank to load N2 million out of your N10 million into your wallet. So, your bank balance in physical cash drops to N8 million, while your e-wallet carries N2 million. With that you can make purchases both within and across the country.

There are so many variance of the e-naira. But this is where we would start because we are not going to pretend that there are not risks in opening your system up. We would look at the various products, determine the risk, determine the best way to mitigate the risk before we now open it up more and more. But it is a journey that we are determined and we have decided we would start on October 1, 2021. Now, on Bitts, we chose them as a partner. In some other climes where they are, they are just like they have their software and they earn their money. But we chose that they would establish their company in Nigeria. The CBN will own substantially majority stake in that company. So it is not my company as people have said, that I went to the Caribbean to setup a company. It is a company that will be established in Nigeria and majority holding will be the CBN. So, in an attempt to choose contractors, the CBN went through a rigorous selection process in line with the Public Procurement Act conducted by CBN Directors and a Deputy Governor. Ten companies were evaluated based on the following areas: Technology ownership and control, implementation timeline, efficiency and ease of adoption, support for anti-money laundering and combating of terrorism, platform security, interoperability, implementation experience. Bitts came first with an average of 83.2 per cent on the scoring grade. We chose Bitts because it is a leader in the digital currency space with subject matter experts at the intersection of technology and policy. Now on other projects. First, the national art theatre.

The first time the asset was used was in Festac 77, when different people came from different parts of the world and after that festival, different global concerts all held in that main bowl. But unfortunately, due to poor maintenance, we allowed the edifice to rot. But in our attempt to revamp the facility as the Bankers’ Committee at about three years ago at one of its retreats at Ijebu Ode decided to assist our Nigerian youths. The Bankers’ Committee decided to fund that initiative and the first phase of that project started in March this year. If you go to the national arts theatre, you will see some changes because work is ongoing. Contracts have also been awarded for the establishment of four strategic hubs – for music, information technology, software developers as well as fashion. This will cost the Bankers’ Committee, not the CBN and not the federal government tens of billions of naira as contribution to support our youths in this country. We are hoping that by November 2022, the edifice would come alive. Infraco is also another project that the president graciously gave approval for the CBN, the Nigerian Sovereign Investment Authority and the Africa Finance Corporation to act as equity holders. The plan is to put in place equity of N1 trillion and N14 trillion as debt. The essence of this is for us to be able to raise about N15 trillion to fund Nigeria’s infrastructure. All we are saying is that there is no need to encumber the balance sheet of the federal government and that with infraco, the infrastructure of this country would be developed again.

Basically we have seen that inflation trending down, what do you think is bringing it down and what will you do to stabilise the economy and keep it that way going forward?

We are happy that this is happening and happening so fast. You will all recall that as a result of the pandemic the world went into a lockdown. This lockdown resulted in locking down of the global economy, supply chains everything was lockdown. Nigeria just like every other economy went into a recession. During the second quarter of 2020 Gross Domestic Product was – 6.1 per cent, third quarter was 3.62 per cent, fourth quarter luckily we escaped recession and it was 0.1 per cent. In first quarter 2021 we recorded 0.5 and second quarter of 2021 5.01 per cent. If you imagine the leap from below the river of -6.1 per cent to -3.6 per cent to positive 0.1 per cent, to 0.5 per cent and to five per cent, it means that a lot of work has been done that brought to where we are today. But I must say that the 5.01 per cent came primarily as a result base year effect that will dissipate. And that is the reason we are not going to make any promise that the rate of five per cent is going to continue. But we will see to it that we end the year, like we said our CBN estimate is about 2.86 per cent average for the year. We will continue to do what we are doing that resulted in this more aggressively.