August 16, 2023

Nigeria is facing dollar liquidity issues in its foreign exchange market due to “gross mismanagement” at the central bank over several years, a presidential spokesman said on Tuesday.

President Bola Tinubu has launched a probe of the central bank under suspended and detained governor Godwin Emefiele after criticising its policies at his inauguration in May, especially moves to prop up the naira currency.

His spokesman made the comments following calls by fuel retailers to increase petrol prices due to a weakening of the exchange rate on the black market, which absorbs overflow currency demand from the official market where the dollar is scarce.

“We are ready to show you exactly what it is that our nation is facing with respect to the illiquidity in the market in terms of foreign exchange as a result of what is now known to have been a gross mismanagement of the Central Bank of Nigeria over the course of several years preceding this time,” presidential spokesman Ajuri Ngelale told reporters.

The central bank did not immediately respond to a phone call requesting comment.

Government lawyers on Tuesday filed a 20-count indictment against Emefiele, one of them accusing him of “conferring unlawful advantages”. Emefiele has challenged his detention by state police and filed an application for bail.

Emefiele, appointed by former President Muhammadu Buhari for a second five-year term in 2019, was due to retire next year. Buhari had supported a strong currency which he viewed as a matter of national pride.

Tinubu, who is embarking on the boldest reforms in Africa’s biggest economy in more than a decade, rejected further fuel price increases, his spokesman said, adding that the country does not require an “upward movement of pump price in order to accommodate the market-driven reality”.

Tinubu scrapped a popular but costly subsidy on petrol at the end of May which has seen prices more than triple, worsening double-digit inflation in Africa’s most populous nation, which rose to an 18-year high in July.

Nigeria is looking for ways to stem the fall of its currency, which has hit record lows on the black market. Acting central bank governor Folashodun Shonubi met Tinubu on Monday to discuss ways to improve liquidity after the bank revealed that it had a $19 billion derivatives commitment as of 2022.

REUTERS