THE Federal Government will make the National Identification Number (NIN) and the Bank Verification Number (BVN) a key requirement for its foreign exchange transactions soon.
This follows the government plan to automate the foreign exchange market.
The government said automation and digitisation of its foreign exchange market would ward off market speculators, who exploit the loopholes in Nigeria’s currency market.
Minister of Finance and Coordinating Minister of Economy, Wale Edun, who disclosed the digitisation plan of the Federal Government at the ongoing 29th Nigeria Economic Summit (#NES29) in Abuja on Tuesday October 24, said through the digitisation plan, the government sought to formalise Nigeria’s currency market and ward off speculators.
“All dealings in the foreign exchange market – from the official to the parallel market where huge arbitrage has consistently occurred – would be thoroughly monitored, adding that offenders would be fished out and punished,” Edun said.
He added, “The market would be digitised and reformed such that all legal and legitimate transactions would fall within the authorities and informal market. Anyyhing outside that would be illegal and a criminal offence. For instance, if you want to pay school fees, health bill, it would be simplified such that you provide the BVN and the NIN for the transaction.
“We are doing this such that a marginal transaction such as the school fees won’t change the exchange rate.”
The minister said a plan to revamp the foreign exchange market would be unfolded very soon.
He admitted that Nigeria’s foreign exchange market was not functioning effectively due to illiquidity, adding that the government was prepared to do everything required to change the status quo.
“Foreign exchange market will be simplified and reformed such that all legal and legitimate transactions will fall within the purview of the authorities and in the formal foreign exchange market. Anything outside that will be illegal, a criminal offence and will be punishable,” Edun said.
Edun admitted that Nigeria’s foreign exchange market is illiquid, but noted that reforms would set it on a path that would ensure it works optimally for the economy.
“The market is not functioning optimally because it has run out of supply, but we’re working to make it work for all of us,” he stated.
Meanwhile, there has been concerns over the downward spiral of the naira against the dollar in the parallel market, fuelling arbitrage and speculation in Nigeria’s currency market.
For instance, the naira as of Tuesday October 24, 2023, continued a free-fall at the parallel market and exchanged for N1, 325 per dollar, creating more uncertainty in Nigeria’s economy.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.