Nigerian politicians and public office holders gravely contributed to the recent serial misfortune of the naira against the dollar in the foreign exchange market, thus compelling the Central Bank of Nigeria (CBN) to devalue the naira and undertake several panic measures to save it from further battering. Here is how.

Political Economist month-long investigation which spread from Nigeria to Ghana has unearthed how politicians and public office holders now move their foreign currencies especially the dollar from Nigeria to Ghana which they considered a safer place to domicile their money.

High on the list are governors, ministers, lawmakers, particularly from the Senate and House of Representatives, and sundry politically exposed persons (PEPs) who have easy access to the dollar and other foreign currencies.

The dollar flight from Nigeria to Ghana stems largely from the glut of dollars among PEPs created by the neo-culture of public officers now being bribed in dollars in lieu of the naira. Rather than trade with the dollar in Nigeria, they have found in Ghana a safe haven to warehouse their loot. This created an artificial scarcity of the US bills thus strengthening it against the naira.

The exchange rate for the dollar in Lagos parallel market, otherwise called the black market has hit over N200 per dollar. This is in spite of the measures announced by the Governor of CBN, Mr Godwin Emefiele to firm up the naira.

Our correspondents’ investigations at the Sheraton Hotel, Ikeja, Lagos, Lagos Airport Hotel, Ikeja, Murtala Muhammed International Airport Ikeja, Lagos revealed that some rendezvous parallel market operators have taken advantage of the situation to rip off unsuspecting persons patronizing the ‘black’ market. Some of the operators stated that the difference between their rate and the official rate was to accommodate the “extra charges’’ they pay to “dealers’’ who supply them the hard currency.

Further probes revealed a lengthening crowd of forex speculators at the black market. This is compounded by the refusal of banks to provide forex for their clients even when such clients have shown incontrovertible evidence that they are travelling. Rather than give their clients basic travel allowance (BTA) in dollars as was the practice, the banks advise their clients to use their debit cards whenever they are shopping or making payment anywhere in the world.

A ‘black’ market operator, Alhaji Usman Gongola, told our Correspondent that he sold one dollar at N208 and bought one dollar for N205. Another operator, Alhaji Bello Abdullahi, said he sold at N207 and bought one dollar for N206.

The CBN had earlier announced a new exchange rate of N168 to one US dollar as against the old rate of N155 to one dollar. But this failed to save the naira which has continued to slide in the marketplace.

The trend within the foreign exchange market in Nigeria up to its present state was influenced by a number of factors such as the changing pattern of international trade, institutional changes in the economy and structural shifts in production of goods and services.

According to the Central Bank of Nigeria, the country has seen an estimated $125bn in retail trading volume daily over the last decade and a combined institutional volume of $5bn daily. These figures no doubt show that the prospect within the Nigeria FX market is huge.

Just like in most parts of the world, retail FOREX in Nigeria began to gain acceptance in the mid-2000s. According to reports, this popularity of the FOREX market among smaller-size accounts can be attributed to an overtaxed and overcharged equities market which has led investors to seek other assets to trade. This gap was easily filled by FOREX trading which offers low barriers of entry, free trading platforms, commission, less tradesman and a wide variety of tradable products.

The Nigeria FX market may have suffered a lot of setback due to the recession in 2008, but without doubt the market is fast picking up. Though there are still doubts as to the safety and security of investments in the market, players within the industry are optimistic that things can still be better and that someday Nigeria’s FX market will grow to become the largest in retail trading volume across Africa only if the right regulatory framework is put in place. This, experts believe has become necessary to protect traders and prospective traders and also to make the market stable and lucrative.

When recently participants gathered at the maiden edition of FX Year 2015, the crux of the matter was on ways to seek a well-regulated FX market considering the volatility of the Nigerian market. With the theme: Nigeria as the foreign exchange capital of Africa, Perspectives on Skill, Infrastructure, Regulation and Volume, Participants at the event saw the need to keep the price hedged for the safety of investors’ fund in the very volatile FX market in Nigeria.

In his opening remarks, the convener of the conference and CEO Stockholm Consulting Ltd, Kelvin Emmanuel, said that the FX Year conference is important because Africa can be a major player in the FX market and with the right regulation in place just as South Africa is adjudged to have the most regulated Stock market in the world, Nigeria can follow suit through the much needed regulation to help protect and grow the market. Regulating the market, he added, has become imperative as this is one of the ways to get capital inflow. This advantage he said cannot be overlooked. He however saw the need to encourage the development of training centres in Nigeria for trading; this way certain misconceptions can be dealt with.

While perhaps not on the top of anyone’s lists for a growing FOREX market, Nigeria is quickly becoming a destination for brokers to market their products. For Head, Trading and ALM, Diamond Bank, Momoh Jimoh, said people need Returns on their Investment and as such the safety of the market is the only way to achieve that, emphasising the need for hedging. “We cannot continue on such risks as it happened in 2008. Those market dealers should have seen the scenario”, he said. While a lot of development he added is going on in the market which will soon be communicated to the public, the CBN should be ready to assist the retail traders, he concluded.