 Now, the Government of the Central Bank of Nigeria, Sibian Olayemi Kadozo, has assured that the institution would do all within its statutory functions to tackle the foreign exchange shortage in the country. According to him, his team would deal with identified distortions and ensure a conducive atmosphere for different categories of investors in the Nigerian economy. Well, moving on now, my guest, Samuel Showme, is a seasoned capital market professional. He currently works at Ion Global Markets Ltd., a subsidiary of Ion Capital, an Africa-focused investment bank in franchise space in Africa and a representative office in London. Before joining Ion Global in 2021, Samuel was the chief dealer of rainbow securities and investment limited at the Ion Broca, the last dog-broken firm in Nigeria. He joins me now to discuss on how speculation and hoarding are affecting the nation's forex regime among order issues. Many thanks for joining me, Samuel. Oh, it's my pleasure being here today. All right, let's just dive straight into it, speculation, hoarding, run-tripping, having identified as the bane of the appreciation of the value of the Naira. How best can the federal government address this issue? Well, thank you very much for asking that question. Firstly, the government have identified a problem, then the next thing is to profile solution. Before the coming in of this new administration, our effect market was characterized by multiple exchange rates regime. You understand? And that regime created a lot of loophole for currency round-tripping and racket-sharing. Because at that level, that time, we see what we observe is that people will go to the autonomous market to buy a spot and now take it to the black market and other places to sell. And the thing is that we must understand the techniques and the dynamics of the effect market itself. Recently, Sibian have been complaining about speculation and hoarding. Good enough it is happening, but speculation is a market ingredient that we must understand in derivative market. What we use the derivative instrument for is for speculation and urging against forming exchange risk. So what is speculation in its simple sense? It is just the purchase of an asset with the belief that the value of the asset is going to arise in the short run. It is for short-term trading. Definitely people speculate around any financial asset, be it stop, be it effects and any other financial instrument. What's coming to the issue that we currently have now, the new administration has decided to float the local currency, the Naira, and floating the Naira simply means we want to subject the value of the Naira to the forces of demand and supply. And if you want to do that, it means we want to be looking at the techniques of our import and our export. You understand? So for us to be able to stabilize the price of the Naira, we need to do more in terms of ensuring that we are increasing our export so that we will be any more foreign exchange and bringing it into the market so as to create liquidity for whatever that is demanding for it. So government has taken a right step in the right direction, but first of all it's coming up with the statement that they want to now come up with a transparent policy giving out the new direction, the new effects in your market structure and regulation in terms of how government wants the transaction in the effects market to be done. It is very, very good, making that pronouncement. Another thing that government did was to issue an executive order which is trying to look at how we can now be issuing out dollar-denominated instruments within the local market and also coming up with another dollar-denominated instrument that is targeted at people in diaspora. All this attempt is to ensure that we are increasing the supply side of the market so that as soon as there is demand, there is adequate supply to match and if we can ensure that definitely the Naira will appreciate the value. But coming up to say we want to start climbing down on the borders and people that are heading, I've said it in different format that firstly government needs to engage all these market passports. Without these people in the market, there is no market, without market passports and in most cases, market pre-exists the rules. You see market operators operating there, you come to regulate their operations. So government needs to approach every key stakeholder in the market, engage them in deep conversation. In the last statement, the creditors to the CBN governor, I wanted life and I listened to it. I'm so happy that he made mention of it, that they are going to start engaging the market operators, engaging them, knowing the rules before them, letting them understand the new direction that the government wants to move so that everybody can operate within the sphere of the rules and that we assist us to stabilize the value of Naira. I get all of that and what Yemi Kadosso is trying to do with his openness and all the policies and of course meeting with the relevant stakeholders, you have explained their hoarding and speculation but I just really need to understand the implications really of them hoarding, of maybe speculating of these dollars on the nation's economy. Now the impact of audience debt, it will negatively impact the economy because it will create artificial scarcity of that currency in the market and once there is scarcity, the value of dollar will go up, you understand and that is not going to help the country at all. Anybody that is into that currently might be enjoying the current situation but the most bear in mind that to revive Nigeria economy is a responsibility that beckons on everybody in the country, even Nigerians outside Nigeria, they need to repatriate some of the enemies of the media and come and invest in their country. So diaspora invests? Yes, there is need for, you know, we need to intensify action and advocacy on diaspora investment in Nigeria. Also looking at what the president is doing now, engaging in different countries, speaking to them, trying to tell them that Nigeria is ready for business is another way by which we can attract foreign investment into our country. All that put together we are only trying to build up the supply side because by the time foreign investors are coming in, whether in form of dialect investment or in form of a foreign portfolio investment into equities and other instruments in our local market here, what we bring to the market is that we are going to increase the injection of liquidity into the market. For others, they have to retrace their step because after the CBN fine tune is ruled and comes up with the rule, then the climbing down on any defaulter will start. Right. That is very well understood, but over time commercial banks have been indicted in terms of roundtripping and all of them this hoarding and speculation, but I want you to break it down for us on how culpable they really are. That's a very sensitive question and the way to look at it like I've said, we have different level of markets, you know, passive plants in this market. CBN itself is a market passive plant. The role it plays that it injects liquidity into the market. The commercial bank, they are also key stakeholders in the market. They are market passive plants. They play a dual role. They serve as the very control which the injection of liquidity into the market you know permeates into the market and circulates. That is what the commercial bank do. Another role they play is that they have to also have a trade index. They also trade on the currency. You understand? So with that, what CBN should do is that CBN understands the language of the commercial bank very, very well. It needs to speak to them and let them know that, okay, this is the limit you can do with this. We can't really say the commercial bank should not play in the market any longer in terms of their own trading index. They have provided trading portfolio and the essence of trading in the market is to make profit. True. So we must be able to balance it. The bottom line is that every market's passive plants should have the interest of the country at heart and play fairly in the market. Okay. I know this is Nigeria and of course most of the transactions that we do locally are denominated in Naira terms. But would you support local businesses charging their clients in FX in the country? Well, that's another very sensitive question and the way to look at it is that at this point in time, now that we have subjected the value of Naira to forces of demand and supply, the only speckle on us is that we must try to make sure that we increase the rate at which we can lower our propensity to import. If we can lower our propensity to import or demand for forex, it's going to assist us in restoring the value of Naira. The lower the demand, you understand, the higher the value of Naira would be. If we reduce the demand for the dollar, that is, we are reducing the pressure. If we are bringing down the pressure on the demand side, then the little we are getting from the supplies, I would be able to satisfy the market very well. We are talking about companies that charges for their services in the dollar within Naira economy. Government has to take a broad step towards covering that. This sort of business that I'll be doing that will not be business done by ordinary people in the country. It will be bigger corporations, it will be businesses that are backed by either PEP or some people in our authority in the country. But the truth is this, we cannot tolerate it. Government must come up with a broad step to put an end to it. You can be playing in our market and be charging in the dollar. The reason is this. Fine, you can say that some of your equipment will be imported. Those equipment that are imported are one of transactions. Are you getting it? But when it comes to your daily operation, your ordinary activities, which are daily operation, they are done in Naira. Everything you are going to be needing from your overhead costs, say, okay, your cost of energy. You are paying for it in Naira, your overhead costs in terms of staff costs. Some of the majority of your staff will be Nigerians. Except for the expatriates. Except for the expatriate. Then what is the proportion of the expatriate to Nigerians that are working in this company to the extent that they can now be charging in dollars? That is another thing that is contributing to the pressure on the forex side. So government has to take a bold step. It might look very tough, but it is something we need to do. We know truly that there are some hospitals that have specialized services, they render, but be that as it may, this is our country. The interests of the country must be very, very paramount in our mind. And we must put the record straight. We just have to put it to them. If you want to play in our economy, you must play within the rule. We cannot tolerate you charging in dollars. Why your operations are denominated in Naira? Okay, speaking of easing the demand for forex dollars and all of that, you talked in person, you talked about the need for more export. But over time, we still have issues exporting some of even agricultural produce from the country here. And do you really think all the barriers have been taken care of to just enable exportation to thrive in this country? Well, to a very large extent, we need to look at our export zones and look at coming up with policy that will actually incentivize and policy that will mobilize people to go into those areas and be exporting those goods. And another thing is this. Basically, what we are currently exporting is crude oil and some agricultural produce. We need to look at our local industry, our manufacturing industry, our own-grown companies. Even the textiles and all that. Yes, to what extent has government been able to support these local manufacturers to the extent that they can export some of their produce? You understand? Those are the key things we need to look at. If we really want to stabilize our economy and stabilize the value of denier, we must support local production of most of the items that we are importing, support them to the extent that they can now be also exporting some of their product to neighboring Sub-Saharan African countries, even not to Europe. You understand? So those are the kind of things that the new government should try to come up with policy reforms and look at those areas so that we have a very stable economy that will be resilient to external shock. All right. Just before we let you go, I just have to throw this one in quickly because of time. Closing the gap between the official rates and the parallel FX market rate, how can this be done by government and what interventions do we really need to do at the short term? Well, in the short term, government has started the intervention by trying to clear the backlog of their FX forward. They've done with 31 banks. And the CPO and Governor affirms the position of the CBN to continue to clear the backlog. We have a backlog of about $6.7 billion. And against the background of the information that we are expecting an inflow of $10 billion from our crude oil sales, you understand? So with that, government should continue to sustain. They should sustain that action, continue to inject liquidity into the market. As liquidity is abound in the market, definitely, Naira will begin to rally. And other thing is this. You look at every other player in the market. We are talking about the banks. What about the bidis? What about the abokia in the streets? What the CBN needs to do or the government needs to do is to bring everybody together into a well-regulated net so that we can monitor the activity of everybody. This is not the time to neglect one segment. So it should be all inclusive. It should be all inclusive. Everybody, because, like I said the other time, the responsibility to revive and drive economy is a collective responsibility. So CBN policy must also be an holistic one that touches on every market, past-it-pants activity in the market. All right, thank you so much, Ms. Samia. We could just go on and on specifically about this SFX issue because it actually does affect all of us. My guest has been Samia Sho, me, capital market professional. Many thanks for all of the useful insights that you have shared on the show for today. Yeah, thank you for having me. All right, that's the size of the show for this morning. I am Justin Akademi. Many thanks for being there. Bye for now.