Illicit Financial Flows fueling Naira volatility — expert
Mr Olanrewaju Suraju, the Chairman, Human Environment and Development Agenda (HEDA) Resource Centre, says Illicit Financial Flows (IFF) from Nigeria is a major cause of Naira volatility.
Suraju made this known in an interview with the News Agency of Nigeria (NAN) on Thursday in Lagos.
Suraju said that IFF was being done by individuals, public figures or corporate institutions who launder funds illegally outside the financial institution.
According to him, you will need to convert the naira to a foreign currency to operate outside the financial institution since the Naira is not a legal tender in those foreign countries.
“So, for them to move out some of these illicit funds they are compelled to change them to a foreign currency, usually in dollars.
“And the pressure of that is what gives the falling value to the Naira.
“The value of the naira is not so bad, but it is because operators of IFF chase the foreign currency with a lot of Naira,’’ Suraju said.
The chairman said that public individuals and even corporate entities send some of their profits outside the country under the guise of purchasing materials.
According to him, they are actually fleasing the country of some of the entitled resources that are meant to be preserved within the system.
“For them to do that, they buy the dollar in the official rates and they sell through the black market.
“Where you have so much Naira chasing few dollars, you can’ t have a stable currency or or a valid currency as we have now,” Suraju said.
The HEDA chairman urged the Central Bank of Nigeria (CBN) to strive for the unification of exchange rates as a multiple exchange rate gives room for corruption and round tripping as the dollar was being bought at the official rate and sold at the black market rate.
Meanwhile, the Naira traded flat at the official Investors and Export window on Wednesday exchanging at N416 to a dollar.
Market Turnover at the window dipped to 88.36 million dollars, 38.41 per cent less than Tuesday’s Turnover of 138.95 million dollars.
The Naira closed trading at the parallel market exchanging at N575 to a dollar, according to traders on the street of Lagos.