The Central Bank of Nigeria seems to have prioritized going after the owner of Aboki FX over developing policy and economic strategy that would help the country bounce back from naira devaluation and return the value of Naira to a better state than this present administration met it.
If one could recall, the present administration made a promise of making Naira be as valuable as Dollars but the Naira as of today seems to be suffering from poor policing and the system failure Nigeria finds itself in.
The Central bank of Nigeria has failed to analyze the root cause of its problems and directed its power as the controlling financial authority and apex bank to little parts of the puzzle that are probably as harmful as they portray them to be in the world of capitalism and free market. The role of the central bank is to govern the financial aspects of these free markets and not condemn businesses without looking at the implications for both short term and long term bases.
As a Financial institution that regulates and develops policies, it seems the body is lacking the right wide lens to analyze the problem at hand and has directed its attention to small players in these financial crises the present government finds itself. At the core of the problem, we find ourselves is the Federal government’s inability to create policies that would help make the economy stable due to the lack of adequate number of technocrats in government, high level of nepotism, favouritism and incompetence at different levels that make up the government. This problem on its own has crippled the economy and created the desire for more people to leave the country to seek greener pastures.
The desire to leave the country either through studying or working has accelerated the need for foreign currency such as pounds and dollars. The central bank of Nigeria due to its disregard for the law of demand and supply decided to put a stop to the foreign currency black market dominated by the Hausas popularly called the Aboki’s at this period in time further increasing the value of dollars and pounds as most sought after currency in Nigeria.
While putting a stop to the domination of foreign exchange by the black market might be a necessary move, were the implications of the move considered, was the timing considered to be appropriate and were the communications well designed to address the issues, was the announcement backed by actions.
Looking at this closely, we can see that these banks have relationships with people in the black markets and even after the regulation, people were still advised to buy from the black market. Timing can also be considered to be poor due to lack of proper analysis of the activities, while trading in the forex market might be one use, we have the issues of schooling in various parts of the world during this period.
One of the key pull factors to the increase in the need for dollars and pounds is the United Kingdom’s recent policy that allows for two extra years to work after studying in the Uk. This pull strategy has made Nigerians long to travel to further their education and hustle for a better life.
To solve the Naira devaluation issue, the CBN concentration should not outright be targeted at Aboki Fx whether the owner uses the platform as a tool to unethically predict foreign currency trends while buying foreign currency in large quantity or not, while that should be addressed, it is a symptom of a larger problem and the question here is how can an individual control the foreign exchange rate of a country?
It sounds ridiculous because, in as much as he might have means to manipulate, it means other factors worked in his favour and it is therefore important that the Central Bank find out those factors and analyze them one after the other in order to develop a holistic solution that seeks to not just solve this current issue but puts measures ahead of future occurrences.
One of the key areas of focus should be towards looking at the problem from a system thinking and behavioural economies angle. When looking at a problem like Naira devaluation, it should be explored from different angles in order to identify the causes and factors contributing to the continuous decline in Naira valuation and these factors should be considered as chain-link factors that might require various solutions with an end goal in mind.
In coming up with these solutions, the use of behavioural economies would aid not just in framing the factors and the real problem, it would also aid the development of contextual solutions that fit into the mindset of people and exploit behavioural change across stakeholders.