On July 18 and 19, the Central Bank of Nigeria (CBN) held its 286th Monetary Policy Committee (MPC) meeting.
The MPC meets quarterly, except in the case of an emergency. The Committee is responsible for formulating monetary and credit policy. It is the highest policy-making committee of the CBN with the mandate to:
- Review economic and financial conditions in the economy
- Determine the appropriate stance of policy in the short to medium term
- Review regularly, the CBN monetary policy framework and adopt changes when necessary
- Also, communicate monetary and financial policy decisions effectively to the public and ensure the credibility of the model and the transmission mechanism of monetary policy.
Following the meeting, People Gazette published a misleading post with the headline: "Nigerians using Naira to buy Dollars will be arrested; it’s illegal: CBN". The article's lede reads: "The Central Bank of Nigeria has threatened to arrest and prosecute Nigerians using naira to buy dollars". Before going further to state that "For those taking money from banks to buy dollars, it is illegal to do so. If the security agencies hold you, you will know the implication of that,"
“For those taking money from banks to buy dollars, it is illegal to do so. If the security agencies hold you, you will know the implication of that,” Godwin Emefiele, CBN governor, said Tuesday at the Monetary Policy Committee (MPC) meeting in Lagos.
By carefully leaving out key details (elections, electioneering) in the headline and lede, the article was sure to garner clicks, the dream of every digital publisher, and interest from an unsuspecting audience.
But PG's article did more than just garner clicks, it sent shivers down the spine of many businesses, students abroad, and investors. The post also led to several needless, but potentially useful think-pieces aimed at proving the "emptiness" of what was perceived as a threat from the CBN.
For context, many Nigerians and startups depend on access to dollars to pay for their digital tools and subscriptions, which are typically offered by international companies. Take, for instance, an online media house like us, Benjamindada.com. Every month, we pay three bills in dollars and none in naira (apart from salary). We pay AWS—for image storage. We pay Ghost—for content management. We pay SEMRush—for SEO insights. We used to pay Otter.ai—for audio transcriptions and Heroku—for cloud hosting. By further limiting our access to dollars, you are going to put us out of business. And that's us a media company, now think about startups who make use of about 15 SaaS solutions to run their businesses.
The content of PG's article was believable because the CBN Governor is famous for wanting to obsessively control the use and supply of dollars in the Nigerian economy. As an economist, he believes that by controlling the dollar in circulation, the value of the naira would go up. But a superficial focus on limiting the supply of dollars in Nigeria is a bandage solution to the real deep-cutting issue the country is facing. Perhaps, we need to remind him that creating a demand for naira by producing and exporting our goods and services is the more sustainable way to improve our economy and currency.
In July 2021, the CBN stopped selling Dollars to Bureaux De Change (BDCs) as a way "to achieve its mandate of safeguarding the value of the Naira, ensuring financial system stability and shoring up external reserves". About a month after, he blamed Aboki FX, a website that collates and publishes parallel market rates of foreign currencies in Nigeria, for undermining the Nigerian economy. In March 2022, the dollar crunch led banks to cut international spending on naira debit cards to $20 per month. When it comes to providing superficial stop-gaps to the problems of Nigeria's currency devaluation, Governor Emefiele has seen, said, and done it all. But July 19, 2022 (Day 2 of the MPC meeting) wasn't one of those days where he tried to further curtail dollars in Nigeria.
What Governor Emefiele did, in fact, say was that "As for those who want to take naira from their account to buy dollars because of the election, I want to warn–not advise–that it is illegal to do so, whereas it will sound more convenient to carry dollars because you can carry just little dollars with a lot of value in your pocket, but if the security agencies hold you, you know the implication of that." And you can listen to the recording of the live streaming on CBN's YouTube channel (starting at 42:00).
His statement above was a response to a Journalist's question. And according to the video we watched and listened to, he never said buying dollars with naira is illegal.
In a follow-up statement reported by Vanguard, Mr. Osita Nwanisobi, CBN Director of Corporate Communications described the misunderstanding as a deliberate attempt to "misrepresent the import of Emefiele’s caution on electioneering spending by the political class."
The article by Vanguard reiterates that "...the warning by the CBN Governor was to those who sought to convert the Naira from their accounts into foreign exchange for election campaigns and not those who seek to exchange the currency for legitimate purposes such as payment for tuition and other personal expenses."
As local media, we need to do better. But please, be not dismayed and carry on with your legitimate use of the dollar.