In today's news, the Central Bank of Nigeria goes after P2P traders and other Bureau De Change (BDC) operators in their desperate attempt to salvage what’s left of the naira. There were reports earlier today about Binance putting a hard cap on the Naira/Dollar trading pair. It is alleged that the Central Bank had ordered the Exchange to do so.
Later in the day clips surfaced on the internet where the police and other security agencies chased down and arrested BDC operators in different parts of the country. There are also reports of the Apex Bank working with telecommunications companies to restrict access to certain crypto websites. Despite The Central Bank's many efforts the Naira keeps plummeting.
There are several reasons why the naira has been performing woefully against the Dollar. One of the major issues is corruption. There have been instances of racketeering in the banking sector where commercial banks sell cheap dollars to the BDC operators who end up selling at the black market rate for a profit. Those who need this FX for production/importation never seem to get them from the banks and end up patronising the BDC.
There is also the issue of trust. The Nigerian government has failed to attract foreign investment and there have been instances of foreign companies shutting down in the last few months due to the high operation cost, insecurities and many issues affecting the nation which the government are incapable of solving. There is also the case of Nigerians losing trust in the naira which has increased the demand for the dollar and other foreign currency.
As many experts have pointed out, Nigeria’s problem can only be solved through fiscal and not monetary policies. The Central Banks' futile monetary policies will only delay or worsen the issues that bedevil its economy. The Federal Government using the police and other security agencies to threaten licensed BDC operators only worsens the distrust local and foreign investors have for the government.
As regards cryptocurrency, I believe the Nigerian government are incapable of regulating the crypto space. Aside from crypto's decentralised nature, many people in government are major players in the space. So if the government ever stand a chance of regulating the crypto space, it needs to look inward, as it is with most issues plaguing this country.
For young Nigerians in the crypto space, this is the time to be very vigilant. You do not want to be a scapegoat. Minimise your P2P transactions or use low-profile or local exchanges for your P2P transactions. This is not the time to move large amounts of money, I believe the commercial banks will be watching and flagging accounts as well. Do not be alarmed, this isn’t new. The industry is resilient and we will overcome this minor setback.
creator: ahmadmanga