A circular from the CBN’s Trade and Exchange Department surfaced yesterday, authorising the sale of dollars to pilgrims to the 2016 Hajj at a ‘concessionary rate’ of N197 to the dollar. The circular said that a minimum of $750 and a maximum of $1,000 can be sold to a total of 65,000 pilgrims.
This is baffling for many reasons. First, the CBN is about to sell up to $65 million at far below its current official rate of N318 to a dollar. That is, it is about to throw away up to N8 billion in foreign exchange subsidies for pilgrims, this is without counting the cost of flying all of them to and from Saudi Arabia.
In a time of growing economic hardship, when inflation is high due to the Naira’s declining value, this kind of move by those who are supposed to be managing our economy is the worst anyone can think of. Several businesses that actually engage in productive economic activity, have had to fold up or are undergoing significant stress because of the forex policy. Till now, a list of 41 items are banned from being eligible for imports with forex, but the same CBN turns around to support this clear waste of money.
There have been noises out of the Presidency that state sponsorship of pilgrimages will stop, but that is clearly not the case. A number of states, like Lagos, Niger, Bauchi and Plateau, even Kano, have already done so.
All across the country, there are workers and pensioners who have not been paid. There are several federal parastatals who are owing money to DISCOs for electricity not paid for. Just this week, a local government worker in Edo State slumped and died during a protest over unpaid salaries.
The CBN’s policies have made things worse instead of better, but despite all the noise made about reducing government waste, they give out foreign exchange at a rate below the market rate, as if they occupy a different planet and a different reality.
They probably do. On Planet CBN, going to Hajj – which is not compulsory by the way – is more important than businesses getting foreign exchange to import what they need to stay in business, or parents getting foreign exchange to ensure their children can continue school, or those who are sick getting treatment abroad as a result of our poor healthcare system.
The CBN is also supporting corruption outright. Those inside the apex bank will collude with those drawing up pilgrim lists, buy foreign exchange at 197, sell at 390, and make an absolute killing. They are about to turn a handful of people into millionaires as a result of currency round-tripping.
Imagine being a staff of CBN and seeing that circular. Your eyes would light up at the possibilities. How many businesses could you do in Nigeria today where you can double your money with a minimum of fuss? Imagine also being a mere pilgrim. After buying $1,000 at 197, you can make nearly N200,000 overnight. Not a bad sum of money to return to, especially in this economy.
Who says you even need to go to the Hajj anyway? You can just buy the foreign exchange and change it, and conveniently miss your flight. There is always another time.
This is will almost certainly happen because rather than a separation of church and state, what we have here is religion subsidised by the state, around the clock, irrespective of what the economic conditions are. In short, on Planet CBN, state sponsored religion is recession proof. A very small number of people get a huge subsidy because of their religious affiliation, while the subsidies for many have been removed.
A pilgrimage is a strictly personal endeavour, with no wider societal impact, and as such supporting such things with public funds is not right. There are several other critical sectors that Nigeria needs to address: Healthcare, infrastructure, education, power, all these areas need the attention.
That is what should be happening on Planet CBN