By Michael Chibuzo
The Labour Party Presidential candidate in the 2023 presidential election, Mr. Peter Obi over the weekend criticised the federal government for clamping down on currency speculators whose activities have contributed to the volatility of the Naira in the foreign exchange market.
Mr. Peter Obi in a post on his verified handle on the social media platform X (formerly known as twitter), described the move by the office of the NSA against unscrupulous Bureau De Change (BDC) operators who engage in Naira speculation as an “attack and disruption of their business” and termed it ill-advised.
Mr. Peter Obi in an attempt to defend these unscrupulous BDC operators and absolve them of culpability in the foreign exchange market volatility said that the BDCs are not the primary suppliers of forex nor do they create demand and pointed out that they only provide a market to sellers and buyers of foreign currency and therefore should be left alone to operate without any form of regulation in their activities no matter how shaddy.
The part of Peter Obi’s post that caught my attention well was where he said, “To think that the BDCs are the cause of the declining value of the Naira is a smack on rational economic thinking.” As expected, Obi also mouthed his consumption to production refrain when he added that the only way to shore up the value of Nigeria’s currency is to move the country from consumption to production.
A look at Mr. Peter Obi’s opposition to the move by the law enforcement agencies to take firm measures against anyone engaged in foreign exchange market speculation as directed by the National Security Adviser leaves one with no choice other than concluding that Mr. Peter Obi is absolutely in support of the speculatory activities against our national currency by unpatriotic elements including some BDCs. Who knows, Mr. Peter Obi may equally be a currency speculator himself!
This is because it is bewildering that a man who sought to be Nigeria’s President in the last election and who is still actively seeking to smuggle himself to Aso Rock in 2027 would be displaying such level of irresponsible posturing against the country he aspires to lead one day all in the name of playing opposition. The fact that Obi sees attempts to curb currency speculation as a “smack on rational economic thinking” tells volumes about the kind of atmosphere he wants to create as President.
Judging by the foregoing, Peter Obi as president may legalise currency speculation since he does not believe that criminal speculation contributes significantly to a volatile currency or forex market. Peter Obi’s simplistic solution to everything seems to be mouthing the mantra, “moving from consumption to production”. The questions we need to ask the Labour Party leader is, how do you move from consumption to production when the value of your national currency oscillates wildly in a way that is largely driven by speculation? How does that encourage production?
Is it that Mr. Peter Obi does not know that regardless of the dollar supply constraints, if you do not tackle currency speculation, there is no amount of moving from consumption to production or even dollar liquidity that will give you a stable exchange rate regime which is driven by REAL demand and supply. If you analyse the performance of the Naira in the past couple of days, you would realise that the value of the Naira is not really determined by true demand and supply dynamics. The market forces have been distorted thanks to the activities of these speculators.
What has been happening is that currency speculators (including many BDCs that Obi is defending) engage in all sorts of manipulation to create an impression of high demand for dollars, which gives them the opportunity to quote any price they want. In fact, the immediate trigger of the action directed by the NSA was the revelation that many BDCs were simply quoting the rates they see on the crypto market platform, Binance.
The Binance rate in itself was always very arbitrary with insider manipulation established. No sane country would allow the value of its currency and by extension the stability of its economy to be dictated by currency speculators. This is what Obi wants Nigeria to allow!
Obi in his BDCs defence post equally said that “BDC operators are a ubiquitous presence in all economies, including the world’s most developed countries.” This is not disputable, but what Obi failed to reveal is that across the world economies including the developed countries, their BDC operators are under close regulation and they don’t quote rates from cryptocurrency platforms or quote any rate that comes to their mind, they peg their exchange rates against the official market rates in their jurisdictions. This is what we must make Peter Obi to understand.
The CBN, amidst dollar illiquidity have been taking proactive measures to stabilise the foreign exchange market and stimulate economic activities which have received commendation from many quarters (except Obi of course). However, the effectiveness of these initiatives is being undermined by the activities of speculators, both domestic and international, operating through various channels, thereby threatening to render CBN’s intervention meaningless. It is therefore strange for anyone, not the least, a former presidential candidate, to frown against any move that would stem the tide of currency speculation.
Peter Obi should understand that you can be carrying out two or more things at the same time. The CBN will continue to look at the market and identify areas it needs to intervene in by way of regulation or other methods. The fiscal side will equally continue to put in place measures that moves us from more consumption to more production (mind you, consumption is not a crime) and of course try to increase our export earnings.
The security agencies will also go after any criminal activity that threatens to undermine or place a strain on the stability of our economy. If that criminal activity is currency speculation by some BDCs, a thousand BDC defence threads on twitter by Mr. Peter Obi cannot stop the raids! We don’t need to face one and leave the others like Peter Obi is advocating. All can happen simultaneously.