…Calls for an upward review
A financial expert, Mr. Johnson Chukwu has picked holes in the recent downward review of the total amount to be spend by Nigerians abroad from their Naira account from $150,000 (One Hundred and Fifty Thousand Dollars) to $50,000 (Fifty Thousand Dollars) annually by the Central Bank of Nigeria (CBN) arguing that it might to some extent affect the prices of certain goods in the market.
Speaking in Lagos on Thursday, Chukwu believed that the recent cap on the amount one could spend from his Naira account abroad would entail that a lot more people would buy cash when they are travelling out of the country.
He hinted that with this development, one would expect that the exchange rate for the autonomous fund would go up as according to him, “we may see Naira exchanging for about N220 again at the autonomous market because the demand for Dollars from the autonomous market is going to shoot up”.
He continued,” so, transactions that used to be executed by cards will now have to be moved to cash market. So, with that, depending on the proportion of imported goods that is paid for with the portion, we might see a minor optic in price level”.
“But the basic thing that we will see immediately is that Naira will depreciate via the autonomous market because demand will shift to that market”.
On the rationale behind the review, Chukwu who is also the Managing Director of Cowry Asset Management Ltd stated that the reason for the review might be to moderate the demand for foreign exchange.
He however opined that the new policy did not affect the domiciliary account owing to the fact that domiciliary account is funded in foreign currencies adding that one could spend as much as one have in the domiciliary account.
He called on the CBN to reconsider the policy and review the total amount upwards as people were bound to carry out legitimate transactions with the use of card than they would using cash in their transactions knowing full well that their transactions were being trailed.
“So it is easier to commit money laundering offenses using cash transactions than to do the same thing using card transaction because your card will leave trail. Since we are pushing for alternative payment system instead of cash, since we have positioned the country to fight corruption under the new administration, I think we should use technology to avoid those loopholes that will allow for corrupt activities”.
“I have said earlier that look, my own suggestion is that the government should review, the Central Bank should review that limit. Simple reason is that when you want to track all transactions, you can only do that when you are using card instead of cash”.
“You want to minimize the possibility of people engaging in money laundering, that is easier when you are using card than when you are using cash. You will also want to minimize the opportunities of fraudsters, criminals and those who engage in corrupt practices have of moving their funds around, I think cash will give them a better window than when they are compelled to use card”.
“So, my position is that they should, if not move back to $150,000, they should increase it to $100,000”, he said.