High rate of dollar: Govt policy, corruption wars are the cause of high rate of dollars----DON

Following the free fall of naira in foreign exchange and the adverse effect is causing on the economy, Don Ohakwe, Chief Executive Officer and Managing Director of Ausque Global Investment Limited and Ausque Motors in Lagos, who runs Bureau DE change and a financial analyst, in this interview with Emeka Ibemere, explains why the rate of dollar is high as against naira.

  You are following the trend of the dollar and the economy of the country, as financial expert, what is your reaction to the recent high dollar rate exchange to Naira.

MY brother, it’s alarming and I think, as it is now, Nigeria’s currency seems to be the only currency which its rate is not near to dollar, all things being equal. I have not heard of such since I was born and since the country’s independence, this is the highest I have ever witnessed in my life for one dollar to be chasing N400. It’s not done in any country and it’s a sign of failed state.

We can no longer buy anything in the market. The price of electronics have gone up, an Air conditioner I bought N65,000 few months ago is now N150,000; a television that cost N45,000 last October is now N95,000. Common pure water is now for the rich, as everything has skyrocketed to high-heavens. We can no longer buy anything and even bread that is a staple food for Nigerians, its price has gone times two, I don’t know where we are heading to.

What do you think is the high rate of dollar to Naira?

Well, I think it should be the fall of the global oil price in international market, it contributed it and secondly, this government policy of withdrawing dollar and stopping or refusing to releasing dollars to the bureau de change operators or opening windows of autonomy are contributing to it. Before, we use to have autonomy from the bank, where you can buy as much as you can buy from market; and that time, the naira will chase the dollar to a standstill and the margin will not be too different. The official rate of dollar is N198, then we use to sell with N2 and the highest we can sale is N205, but because we cannot even see dollar again, businessmen, the importers because they cannot see dollar again result to be buying at any rate you give it to them, and they are ready to buy it because many of them their goods are on high sea, some their goods are in the ports, and they need to clear it.

In abroad their business partners are on their necks, most of them will pay in dollars before their goods could be sent to them down here. So, their foreign counterparts have refused to release their goods to them until they see their money and it’s in dollars that they used to pay for their goods, so under this pressure, they have to sort and source for dollars by every means to pay for their goods, so that the ones they have invested cannot go down the drain. This is the reasons why dollar rate is astronomically high; even I can tell you now that this is the official rate of dollar in Nigeria.  

People are pointing fingers to bureau de change operators as contributing to the down fall of naira, do you also subscribe to this argument.

Somehow, yes! In the sense that if they had agreed to make their margin stable or like N20 to N50 and kept it at that no matter anything, against the official rate like you add N20 as against N198, which means you they will sale at N200 and make profit of N20 per each dollar, it wouldn’t have reached to this level we are in now. But because the purchasing power, that is the people needing the dollar are more than the few dollars in circulation, it keeps on going high. Let’s say I can meet Mr A who is in need of dollar and I told him I can sell for N300, he will be happy to buy, because he needs it and he is source for dollar to pay his bills. Again, politicians contributed a lot, because of the present’s government determination to fight corruption, some of the politicians because they are afraid, mop up the available dollars in circulation and moved their money to overseas. All their naira in Nigeria banks was cleared to buy dollars and they moved their money abroad to avoid detection by the government, so this made the dollar to be scarce. As I speak to you, you cannot even see dollar anywhere to buy.

Government policy of trying to discourage importation of goods and encourage local production of goods also cause it because in their effort to do that, they come up with policy of not selling to the bureau de change operators. But they forgot that such policy is not what you rush like that without putting infrastructure on ground for the thriving of the local manufacturers. We don’t have steady light, we don’t have some of raw materials, our roads are in bad shape and nothing is working. I have not seen an economy that moves on without light, it’s not possible. First of all, you give us light, which are a necessity, and then other local manufacturers will spring up immediately.

Will you suggest closing of bureau de change?

   Of course, if the government can muster enough political will and courage to do so, I will support it because nothing is happening. Even without closing it, nothing is happening in that sector because government is no longer giving them money since January this year and they are just there without getting money to operate their businesses as usual. There is where you can get dollar now unless from people coming from abroad.

The cabals behind the bureau de change may make it difficult for closing the operators.

  Its better they close it because as it stands, it’s no longer contributing to the economic development of the country; it’s having an adverse effect to the economy. I learn that government is trying to refund them their N35million pay-up capital, and I think that is the end of bureau de change, already the current CBN governor is not a fan of bureau de change business, as far back as when he was in the banking sector. He doesn’t do anything with the operators of bureau de change, when other banks were taking 30K; he was taking 5k, in order to discourage bureau de change business. I suggest that government should scrap it off.

What is your take on the allegation that banks give bureau de change dollars at N198 and the operators would sale at N300 or N400, and return gains to the bankers thereby keeping the rate continuously?

 This is my first time of hearing it but from where are the banks getting the dollar they are giving out. Who is giving bank dollars, perhaps from international market, I don’t know but it could be possible. My suggestion to this government is that if they want to discourage importation, and encourage local manufacturers, they must give us a steady power supply because its when you have steady power supply that you see local small scale firms sprouting up but in a situation where you don’t have raw material, no infrastructure, no light, and other basic amenities, I don’t know what type of policy you want to adopt. The way things are going on it may reach N1000 per dollar if drastic measures are not put in place.