Tinubu’s Forex Unification, Failure of CBN’s I&E Window to Save the Naira

Just three months into the implementation of the brand new monetary policy of President Tinubu’s administration – ‘Forex Unification and the CBN ‘I&E Window’, the fate of the Naira regaining its value hangs in the balance. A situation where the national currency consistently falls flat to the devaluation pressures at the official market, parallel and black market, suggests that the policy of Forex Unification and I&E Window may not be working, as we are beginning to see.

Arguably, the forex environment is being overtaken by its own systemic and systematic contradictions, especially, in the so-called I&E Window of a ‘Willing Seller and Willing Buyer’ operating system that has the official Nigeria’s Forex Market.
Inquisitively, for us, these twin policies in one, critically at their best are not saving the naira from further devaluation that has now doubled the amount Buhari left the official naira to the dollar between N465 to N789 as against $1, which is now being bought or sold under the Tinubu’s Forex Unification and CBN I&E Window structure, while the parallel market is having a groove day of exchange at N920 and N1000 for 1 dollar.
We are not envying President Tinubu and the current CBN Acting Governor, Folashadun Shonubi, on the policies they considered best to address the naira free fall or the corruption within our forex market system. Although we believe they mean well with these policies and other economic directions the Government is putting in place to secure the economy.
The Government of the day may have toiled with forex liberalization as the best option it can afford, sadly still, the current realities require not just liberal monetary policies because they have successfully created a platform for greedy sellers and miser buyers, linen to their pockets. So, the Government should have understood the implications of a free market economy on a fragile environment like ours where greed and selfishness rule.
Interestingly, as a humble economic researcher and analyst, l welcomed these policies cautiously because it was not going to help the naira gain its value as the Government and the CBN anticipated a robust national currency.
In retrospect, as a concerned Nigerian, particularly with an unbiased interest in our national economic and development project, my take on the Forex Unification and I&E Window was well read through in a piece titled “Sound Naira is Required for Forex Unification Success”. And, l was quick to remind the authority of not doing what was germane, rather they were so fast to deploy the policies.
Nevertheless, the question that rings a bell and we expect every economist or political economist to ask are:
Do the Government know that the Forex Unification or I&E Window cannot survive under a deficit economic structure?
Has President Tinubu forgotten that our economy is import-dependence, where every businessman and woman looks for the dollar to feed our consumption of foreign items?
Does President Tinubu think Forex Unification can survive under a free market, where the goal of the players in such is to maximize profit at all costs?
Is it not time for the CBN and President Tinubu to acknowledge the fact that the uncertainty around the four major sources of FX inflow into Nigeria namely: proceeds from crude oil exports, non-oil exports, Diaspora remittances, and foreign direct/portfolio investments are dwindling, and in need of a pragmatic policy direction?
Moreso, it should be noted that the question of adequate forex supply to demand requires discipline and stringent measures and methodologies if we truly want to end corruption within the corridors of our FX market.
Even though our number one source of FX revenue is crude oil, which is currently gaining momentum at a high price, hedging close to $100 per barrel of crude, however, we need not remind ourselves that we are at the mercy of the international market price fluctuations and if it drops below $70/barrel or any shock due to the uncertainty around it, the burden will be excess on our foreign reserves as well as on the Government cutting down its spending on projects that would have reduced infrastructure gaps and poverty.
Meanwhile, the answers to earlier questions raised stir us in the face. And for us, the answer, evidently, is in the vision of President Tinubu and the CBN redesigning the Forex Unification and I&E Window beyond the liberalization model which is feeding the so-called ‘Willing Buyers and Willing Sellers’ with surplus forex from crude oil export, non-oil export proceeds, Diaspora remittances, and foreign direct/portfolio investments, because, these would create opportunity for round-tripping, speculation, overpricing of the dollar and devaluation of the naira.
In other words, while the CBN struggles all out by deflating our foreign reserve to meet the I&E Window demands, an oppressive distortion is brought to bear on the Naira exchange rate through the back door resales of the dollars at the black market. This now puts to question about where the black market players get the dollars in excess to some business people who claim they get from them since the CBN cannot supply to meet the huge demand request.
The above throws up a lot of issues that demand critical analysis, especially as one is confronted with the dilemma of which tent to align with.
Fundamentally, we need a monetary policy that will salvage the Nigerian economy from oppressive and retarded activities in our FX market.
Our modest suggest the way forward, first and foremost, is that President Tinubu must rethink Forex Unification that incorporates free market or liberalization as the surest way to bring Naira back to its great value.
It is our prayer that the President considers other parameters that would help naira regains its value, by finding a solution to our import dependency syndrome, poor infrastructural governance and economic policy somersaults.
In this regard, President Tinubu must avoid the mistake of surrendering the forex market completely to liberalization apostles.
Secondly, the CBN as the monetary authority must be steadfast to avoid distortions in the monetary instruments it deploys.
Thirdly, ensuring monetary equilibrium equally requires eliminating or minimally reducing the burden of round-tripping and double-dealings in forex, which in most cases compound the loss of confidence in the Apex Bank official forex platform.
Lastly, the Apex Bank with all sense of urgency must ensure the Deposit Money Bank (DMBs) proactively take advantage of opportunities available in the export/import facility window to fund the forex needs of import customers.
In conclusion, one of Nigeria’s finest economists and a monetary experts, the late Sir Henry Boyo, would always admonish the CBN “to create monetary frameworks and policies that strengthen the Naira, an act that would be in the interest of all Nigerians.”
We reemphasize it today.
President Tinubu and the CBN, please, save the Nigerian economy and redeem the Naira.
Adefolarin A. Olamilekan,
Political Economist
Tel: 08107407870

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