THE GUARDIAN
The recent quest by the Central Bank of Nigeria (CBN) to enhance the participation of Nigerians in the diaspora, in the domestic economy especially through increased remittances is worthy of commendation. This is the way to go, given the current perennial supply shortage of foreign exchange in the local market relative to the demand. This shortage has been a recurring factor which has had a serious impact on the stabilisation of the exchange rate and the management of the persistent volatility in the market. Indeed, it is good to assist Nigerians in the diaspora to send money home. Still, other factors exist which, it is hoped, the CBN has taken cognisance of while being excited in the mounting of this policy.
This proposed solution to the shortage of foreign exchange in the country which was jointly crafted by the CBN and the Nigeria Inter-Bank Settlement System (NIBSS) and tagged the ‘Non-Resident Bank Verification Number (NRBVN)’ appears plausible. Conceptually, the positive impact of the diaspora on the survival of the economy cannot be overemphasised. The prevailing challenges of the global economy especially the instability in the global crude oil make the inflow of remittances a sine qua non for the economy’s survival, especially in the boosting of foreign exchange supply.
Of a truth, the stabilisation of the exchange rate has a tremendous impact on the manufacturing sector, among others, through the effect of easing the availability of foreign exchange for imported inputs and the pass-through effects it has on the cost-of-living index. The need to engage the diaspora to maximise the potential of the economy cannot be overemphasised. There is a need for further steps by the authorities to enhance the inflow of remittances to the country. Hence the statement by the CBN that “The NRBVN is part of a broader framework that includes the Non-Resident Ordinary Account (NROA) and Non-Resident Nigerian Investment Account (NRNIA)” is quite refreshing. As implied in the CBN position, these platforms will enable access to savings, mortgages, insurance, pensions, and investment opportunities in Nigeria’s capital markets,”
This is a good step in the right direction. However, the CBN should recollect the popular saying that “if wishes were horses, even beggars will ride”. There have been numerous policy frameworks on the enhancement of foreign exchange inflows into the country before now, which have not really materialised as expected.
Recently, under the leadership of Godwin Emefiele, the CBN enunciated the Remittances and Trade 200 (RT200) foreign exchange programme designed to boost foreign exchange reserves from non-oil exports to $200 billion over three to five years. This has faced challenges in its implementation and impact. For instance, the RT200 programme, despite good intentions, created a separate foreign exchange window with a different (subsidised) exchange rate, had governance issues with potential for unintended consequences, and exacerbated existing foreign exchange issues.