By Omodele Adigun
The Central Bank of Nigeria (CBN) yesterday made real its earlier threat to sanction banks sabotaging its foreign exchange policies.
In the latest clampdown, the bank barred 12 Deposit Money Banks (DMBs) from the foreign exchange market for SMEs, attributing its action to complaints that some banks are deliberately frustrating efforts by many Small and Medium Enterprises (SMEs) to access forex from the new window created for them.
Recall that the apex bank, last month in Washington, USA, at the just-concluded Spring meeting of the World Bank/IMF, threatened to deal decisively with any bank implicated in the alleged bid to frustrate SME entrepreneurs from accessing foreign currencies to boost their operations.
A statement by the bank on Tuesday read in part: “Following persistent complaints that some DMBs have deliberately frustrated efforts by many SMEs to access forex from the new window created by the CBN, the apex bank on Tuesday barred all, but eight, banks from dealing in the SME wholesale forex window.”
Sources at the CBN disclosed that the financial regulator took the decision to bar the erring banks based on field reports, which revealed that only eight banks had sold forex to the SMEs segment since the inception of the new window.
According to the source, the CBN frowned at the action of banks that declined to sell foreign exchange to SMEs to enable them import eligible finished and semi-finished items despite the availability of forex from the CBN wholesale intervention window. Confirming the decision, the CBN Acting Director, Corporate Communications, Mr. Isaac Okorafor, said all banks that had refused to sell forex to the SME actors after accessing over $300 million offered to the SMEs wholesale forex window since its creation last month will be sanctioned accordingly.
He listed the banks not barred to include: Access Bank Plc, Diamond Bank Plc, Fidelity Bank, Heritage Bank, Jaiz Bank, Sterling Bank, Unity Bank and Zenith Bank, warning that the CBN would not sit back and allow any form of instability in the interbank forex market through the actions of institutions or individuals.
Okoroafor therefore urged all stakeholders to play by the rules for the benefit of the entire country and its economy.
At the Washington meeting, the apex bank attributed its warning to a widespread allegation that SMEs, regarded as the live-wire of the nation’s economy, are being frustrated from accessing the $20,000 special intervention fund approved for operators per quarter by the apex bank.
Speaking at a special press briefing on the sidelines of the recent IMF/World Bank spring meeting in Washington DC, USA, Okoroafor warned that the apex bank would sanction any DMB that sabortages the current economic reform programme of the Federal Government. He said, “it has become necessary that we bring to your notice the complaints from customers, especially those operating in the SME segment of the market, that banks are frustrating their efforts at getting foreign exchange.
“You could recall that recently, we introduced a window to be able to give forex to SMEs, which incidentally are the engine of growth in our economy, for small amount of forex that suits their business. But we have been receiving complaints now that banks are frustrating them.
“We have reviewed all these complaints and found out that they do not have evidence and so we want to use this opportunity to appeal to customers of banks and the SMEs to please give us concrete evidence against these banks so that we can hold them accountable by way of sanctions that may even hurt their chief executives.”
Okoroafor advised customers who encounter such treatment to photocopy their Form X, Form A or Form M along with the name of the bank and branch and send same to the CBN so that such recalcitrant operators can be used as test case for others to learn some lessons.
He called on the affected customers to call or email the Consumer Protection Department of the CBN with evidences of their frustration assuring they would get redress.
Meanwhile, the CBN continued its massive intervention in the foreign exchange segment of the financial market by injecting a total of $196.2 million into the various segments of the forex market on Tuesday.
According to Okorafor, the apex bank offered the sum of the $100 million to authorised dealers at Tuesday’s forex wholesale auction. A breakdown of the other interventions indicate that the CBN made available the sum of $52 million to the SMEs segment, while invisibles such Personal Travel Allowance (PTA), Basic Travel Allowance (BTA), Medicals and tuition received $44.2 million.
Okorafor also announced interventions in the retail auction window, which he said would be computed when the bank receives requests made by customers to the CBN through their respective banks. He also disclosed that the bank will continue its weekly sale of $20,000 to dealers in the Bureau de Change (BDC) segment this week.
The spokesman expressed confidence that the interventions will continue to guarantee stability in the market and ensure availability to individuals and business concerns.