Connoisseurs on Thursday applauded the Central Bank of Nigeria (CBN) for extending the Naira4Dollar scheme required to close on May 8.
The experts gave the appreciation in an interview with the News Agency of Nigeria (NAN) in Lagos.
The apex bank had on Thursday in a circular titled “Re: Introduction of the CBN’s “Naira4Dollar Scheme” for diaspora remittances announced its continuation till further notice.
Additional to the CBN Circular referenced TED/FEM/ PUB/FPC/01/003 dated March 5, on the above subject matter, which was originally scheduled to end on May 8, we hereby announce the continuation of the scheme until further notice.
All aspects of the operationalization of the program remain the same,” said the CBN circular. Commenting on the development, Professor Uche Uwaleke, president, the Association of Capital Market Academics of Nigeria, said the extension was a welcome development. Uwaleke said the objective was to reduce the cost of remittances which should act as an incentive to increase the Diaspora remittance.
“This, in turn, is expected to reduce the pressure in the forex market, narrow the gap between the AFEX rate and parallel market rates and ultimately lead to an appreciation of the naira.
The question is: to what extent has this been achieved?
“It is only a high success rate that can justify the indefinite extension of the naira for dollar scheme against the backdrop of the fact that it is being implemented at a huge cost to the CBN with a balance sheet that is already stretched.
“On the surface, it is a welcome development. But as I said earlier, the CBN should provide the public with information on the performance of the scheme,” Uwaleke said.
Also speaking, Mr. Ambrose Omordion, the Chief Operating Officer InvestData Ltd., said the extension of the Naira4dollar scheme by CBN was a welcome development to enable the apex bank and businessmen to know the effect of the policy.
Omordion added that the extension was timely, especially at a period the crude oil price was heading to 70 dollars above the 2020/2021 oil benchmark in the national budget.
“This is also expected to help stabilise the exchange rate and reduce imported inflation as the CBN works toward exchange rate unification,” he said.
Omordion said the introduction of the scheme by the CBN in seven weeks had not done much to support exchange rate stability as the rates continued to fluctuate within this period. He noted that the devaluation of naira over time had continued to weaken the nation’s currency and encouraged imported inflation, which invariably led to today’s galloping inflation rate of 18.17 percent.
Omordion explained that these developments made the apex bank extend the scheme for an enhanced result.
The Naira4dollar policy gives a N5 rebate for every 1dollar sent by Nigerians in the Diaspora to the country, which is paid directly to the account of the beneficiaries, following the receipt of the remittance inflows.
