 Nigeria is Africa's biggest economy has been battling dollar shortages that arose from previously low oil prices for oil, its main export and coronavirus related disruptions. It has put a multiple exchange rate system in place as the government seeks to avoid the embarrassment of a large narrow devaluation. Earlier this month the Central Bank of Nigeria Sebyan at the launch of the 100 for 100 policy for production and productivity PPP announced plans to unveil a new effects beaten regime to support Nigerian companies in need of forex, particularly those involved in local production and job creation. We will focus on the Central Bank's forex regime vis-à-vis so to deposit money, banks, and effect on the economy. Welcome to Business Insight and Plus TV Africa. I am Justin Acadone. Now ador-traded petroleum product, Africa's dwindling GDP, telecom's plant strike against MTN among others rounded up the business Nigeria this week. Here are the highlights. The petroleum tanker drivers branch of the Nigerian Union of Petroleum and Natural Gas Workers on Wednesday threatened to begin a sudden nationwide strike to protest the failure of the federal government to fix 21 selected highways based on agreement reached by stakeholders. Also the drivers under the endorsement of Nupeng stated that they had discovered that senior government officials were currently diverting the 621 billion Naira provided by the Nigerian National Petroleum Company limited for the rehabilitation of the identified federal highways. President of African Development Bank AFDB Dr Akinwumi Adeshina has lamented the dwindling economic fortunes of the African continent which he said had a decline in its gross domestic product GDP by 165 billion dollars in 2020. He noted with dismay that over 30 million jobs were lost while 26 million persons fell into extreme poverty within the period. MTN Nigeria has disclosed it is yet to receive a notification of strike action from the private telecommunications and communications senior staff associations of Nigeria which recently threatened to ground its activities if the union demands are not met. In an email statement titled response to new alleging planned industrial action signed by company secretary Uto Upanna the company said MTN Nigeria Communications BLC has received multiple media inquiries about a communication purportedly circulated by Texan which alleges plans for an industrial action intended to disrupt national communication services. The central bank of Nigeria CBN says its foreign exchange policies especially the Naira for dollars scheme has led to significant improvement in diaspora remittances into the country. The apex bank revealed the diaspora inflow into Nigeria increased from an average of $6 million weekly in December 2020 to an average of more than $100 million weekly by January 2022. This was disclosed by the CBN governor Godwin Emefele while speaking at a special press briefing at the end of the bankers' committee meeting on Thursday February 10, 2022 at the CBN headquarters in Abuja. Investors committed about $3.36 trillion Naira to federal government bonds between January and December 2021 according to an analysis of the FGN bond action results available on the website of the debt management office. Bond oversubscriptions hit $1.61 trillion Naira within the period under review indicating the investors' strong appetite for FGN bonds. In July, Costa Naira to tumble to record lows on the black market. However, the apex bank is now saying it has no immediate plans to ban sale of forex to bank. Joining us now to discuss this is an economist, Gospel Obele. Many thanks for joining us Gospel on the show. Alright, let's talk about this issue that has been on since yesterday with the central bank addressing the governor addressing the press conference saying that from December it will stop selling effects to commercial banks. But today we saw a bit of a retraction saying that the CBN has no such plans. But let's talk about the ideal situation. How should it really be? Should the banks, the DMBs, commercial banks go cap in hand to the central bank to source for forex each time their customers demand it? Meaning that the supply and good to that market is already disrupted by virtue of our streams of effects received as it were. Then on the flip side of things, the demand is outrageously high. Looking at it from the formal numbers to the informal numbers and the likes. So Nigerians are constantly in need. The conversation between CBN and the banks currently stands within the context of the official market at least. Now if you spread that a bit externally to the context of the youth market, there is a big conversation around real change operators, sourcing effects and making effects for Nigerians who may not be able to source for banks and like. So we need a relatively more sustainable approach to dealing with the core problem of effect shortage. Until we can deal with that, any other policies that the central bank is introducing will come back to hurt the economy because the central bank is trying to manage effects flow. Not meaning that I mean when you have an outrageously high market demand, it's going to be like an aggressive move from the demand side stakeholders. Meaning banks will change and be end users, consumers and the likes. It's going to be an aggressive move by those stakeholders to get the dollar at any cost. And when you go that route, you increase activities in the informal sector, the exchange rates will increase and there may be some receipts of informal foreign exchange in a sense that cannot be accounted for. So there's going to be a lot of pressure down the line if the CBN goes this route. But the CBN's context is quite justifiable. There's a strong FX challenge and the CBN cannot solve that problem without the support and commitment from the fiscal body, which is the federal government of Nigeria. But specifically over time, the CBN has had a lot of different policies just to help boost FX and of course demand for access by Nigerians and those who really have no genuine needs from it. Over time, you are aware of what happened with Bureau of the Change Operators and that they've been banned from selling FX. But do you really think that in a way has actually helped out in any way since they were banned from selling FX? So many of the policies the CBN has introduced when it comes to FX management have been reactive rather than proactive. Reactive? Yeah, reactive. I mean, you only think about it is when you have an injury on your leg and then you are not treating that injury. Instead of treating the injury and using all the necessary medications, you are just putting the plastic and the bandage, hoping it will heal like that. I mean, you're given for infections and so on. And that's what's happening right now. The central bank is in a fix and literally running out of options. And because you already have a supply challenge, it's seeking to manage and control the demand flow. So what you've seen that a whole lot of policies over the years or over months, telling the last four years has been trying to reduce FX access to certain commodities, trying to increase this, trying to increase that, trying to shut this out. All of these policies have been reacting and they've been patching the problem, not necessarily solving the problem. That's why every time we come back to this challenge and anytime we come back to this challenge, the foreign exchange will suffer for it. And guess what? All right, every stakeholder, including the every Nigerian suffers for it. So until we go back to the basis of structural approach, all of the policies that the central bank has introduced to be honest, none has worked. How do we know? The Naira is currently exchanging almost $580 to the dollar. So the more you see the exchange rate worsening, the more it is to tell you that our exchange management has not been effective and it's not working. If we had to be the first side, then we should see some appreciation of the Naira, we should see some improvement in FX reserves and foreign exchange and all that. So far to not forget, these shortages are leading to what we call increased leakage in the economy. And because leakage do not exist in the bank in vacuum, all right, they're increasing SMEs and individuals who are now engaged in foreign exchange transactions. All right, in high volumes, for items the central bank have banned access for. The central bank rollout has value for FX items. I didn't even get one. So some SMEs in the financial space are now funding items that are out of the central bank list to access FX. All right, so that's to tell you that with increasing policy parties and reactive solutions come severe leakages. And that comes back to hurt the foreign exchange and the value of the currency. What are the central bank policies to me? I mean, talk to the layman. All right, I think cheaper, I think it's better. Can you exchange Naira to the dollar at cheaper rates? The answer is no. All right, so these things will only answer to key structural reforms. And those structural reforms must meet with the monetary policy institution and align it properly with the fiscal representation or the fiscal policy. In this context, there is a lot of divide, all right, and there's no, how I put it now, complementary engagement, being close to partners. And don't forget, the fiscal arm is threatening, is how I put it, currently engages the economy under the lens of political correctness. That means what is priority for the economy within the lens of winning an election in 2023. So that already puts us in a very severe situation. All right, same conversation you have with the floating of the currency. All of these things will happen. It's not a commission of if, it's a commission of when. All right, and that's the case. It's quite bad to be very honest in the week to long term for the Nigerian economy. All right, we still have Gospel Obele, the economist on the show, and we are looking at the federal government and the CBN, some effects of regime and management in the country. In a moment or a return, what's more, to join us again. All right, welcome back. It's still business and science and plus TV Africa. We still have Gospel Obele standing by. He joined us via Zoom. So Gospel, let's talk about the role of MDM-based commercial banks in all of this because over time, we all know that the demand for effects in the country is really very high and supply side is not as much as cannot really match up with demand. But over time, we've had issues where the commercial banks do not exactly give out this particular effects to those who have genuine needs for them. Just what role do commercial banks have to play in the stability of the effects in the country? Yes, you're very right, JJ. As expected, commercial banks should enable the aspirations of vision, the policies and the engagements of the central bank in terms of that intermediary between the consumer side of this market. That's the expectation. I mean, it's surprising to me that even at that level, there are a lot of misalignments. And in many cases, the central bank needs to also, sorry, the commercial banks need to also protect themselves and all that. What do you define as legitimate needs? Where does legitimate needs start and end in the sense of things? So we had central banks making pronouncements around who only make effects available to consumers who need it legitimately. What does legitimate needs mean? Then going into the commercial banks, you realize that different commercial banks have different ways they interpret the central bank policy. So there's a lack of policy coherence and consistency between the CBN and the commercial banks. In fact, when the central bank took out the restricted BGC access to just commercial banks, I mean, you realize that the average BGC can not still access effects in a commercial bank. They're not even accepted in those spaces. I mean, it's something that they're strong for. They're not even accepted or regarded as people who are valid for effects transactions. So the commercial banks, in as much as they're trying to protect their own interests, and in as much as you have policies with alignments and all that, there are also internal control issues. There are limitations around how much people can access and what people can access and why they can access them. So all of these structural portfolio issues as to where further hurts or redefine the exchange rate value in the parallel market. Because one thing it does is it creates more artificial scarcity. And with artificial scarcity comes empowering of the BGC's to determine what the exchange rate to be at the will. I've been in engagements where individuals are trying to exchange currencies and none of them is a BGC, but they're trying to agree on a rate they can put exchange for. It's uncalled for and you cannot really define that anywhere in the world. We have national currency as they put down. So there is a huge conversation around alignment from the apex body to all of the other intermediaries, like commercial banks, fintechs and all that. And secondly, I do not think that we'll be able to take or deal with this effects problem without effective collaboration and alignment. So the central bank has to do more in collaboration with the commercial banks, do more in collaboration with the fintechs, because the fintechs have a strategy to reach the last mile. And that is something the commercial banks do not have. And as much as commercial banks have the institutional power and resources, they do not have a last mile strategy. It's the reason why you see an average fintech reaching a rural woman in Lester Caduna and a bank cannot get there. You go to some northern states and even some southern states, you can only find one bank in three villages. So these are the very deep conversations. And you have all that speech across financial literacy or digital literacy and all that conversation. So the question of a productive economy and a valuable currency is largely hinged on the level of collaborations, the level of empowerment in terms of enabling non-oil export businesses, non-oil sector businesses, to become competitive so that they can export. When they start exporting competitively, they can start earning effects from the non-oil window. That non-oil sector holds about 93% of the Nigerian GDP. All sector holds relatively about 7%. So how can 7% of your GDP be raking in 80% to 95% of the foreign exchange receipts? That is a gross misalignment. All right. And that is really, really poor economies in the real sense of things. All right. Gospel, before we just round off, I just want to get your quick opinion concerning. At the launch of the 100, 400 and PPP, it announced plans to unveil a new effects-beading regime to support Nigerian companies in need of forex. How far do you think that can go? That may be slightly affecting in terms of initial rollouts. But still, like I mentioned, and I mean, taking a cue as well on the empowerment, there is no structural basis for that to fly. I didn't even get what I'm trying to say. You still have an economy that's heavily dependent on imports. You still have an SME or SMEs who are struggling with increasing cost element. Take for instance now, close to a week before scarcity. All right. And do you know what that means? That means that in terms of operational and costing dynamics for doing business, it's worse than it used to be. So all of these enablers have to be working for any central bank intervention to make sense for business. I didn't even get what I'm trying to say. So one intervention, in terms of economic recovery and the complexities that come around with globalization and the post-COVID economy, you want to think of mixing your intervention with other variables that would make or break for the success of that intervention. So we need to rethink our social intervention, be it fiscal side, be it monetary side, be it institutional policy or whatever the case may be. So the central bank 100 by 100, the policy makes sense. Just like the interim makes sense. But all of these initiatives or these interventions do not exist to bring the results in isolation. Usually I say that upon take off, it may slightly bring some results. So invariably we have to go back to the structural issues. We need to do, yeah, the structural and the enabling issues to make them fly at the end of the day. But that means there is hope at the end of the tunnel as well. Thank you for having me, JJ. Thank you so much, I'm Gospo. I appreciate your time. Thank you. All right, and before we go, Ghost mode digitization is a panacea to financial services security and order bottlenecks. Ghost mode is an innovation by FinTechs to ensure previously as well as solve the dual challenge of protection and security. I'll leave you with highlights of that. I am Justin Atadone. See you again next time. In Nigeria, investors are taking positions or stakes in the country's growing tech ecosystem, internet penetration and reaching the large unbanked population. However, FinTechs have been settled with challenges of financial inclusion, loans as well as digital security. Disruptions within Nigeria's tech space will be stared as digital banking makes its way into the FinTech community through ghost mode banking. These features help to actually help to customers to include their transactions. So in this sense, we are actually building features that will ensure security. And above all, we are also using, we are also providing a strong security architecture that will protect customers data overall. And that's one of the reasons why we are actually going to talk about data privacy protection and security. So in the sense of it, if you actually even, if you transfer to somebody who has a phony character or criminal character, even erroneously or you misplaced your gadget, and they see that transaction, you are protected if you are naturally used at ghost mode. Full digitization processes mean that customers will not only be able to conduct transactions real time, but will also get much needed support online. Yes, the civilian has been clamoring for financial inclusion. And I just say that it is actually a very challenging project because I've experienced and I've been involved. The reason is that the cost of actually bringing these people on board is pretty high. And cost of doing, cost of ensuring that their transaction is done is pretty high. This feature allows users to transfer funds to beneficiaries or make payment without revealing their identities.