Cbn new forex policy fails

The Central Bank of Nigeria (CBN) has introduced several forex policies over the years, and some of them have been met with criticism and failure. Here are a few examples:

  1. Multiple Exchange Rate Regime (2015): The CBN introduced a multiple exchange rate regime, which led to a proliferation of exchange rates in the country. This caused confusion and made it difficult for businesses and individuals to determine the official exchange rate.
  2. Foreign Exchange Restriction (2016): The CBN introduced a foreign exchange restriction, which limited the amount of foreign exchange that individuals and businesses could access. This led to a shortage of foreign exchange, causing prices to rise and economic activity to slow down.
  3. Forex Allocation to Bureaux De Change (2017): The CBN allocated a significant amount of foreign exchange to bureaux de change (BDCs), which were supposed to sell it to customers at a fixed rate. However, the BDCs were unable to meet the demand for foreign exchange, leading to a shortage and a rise in the black market rate.
  4. Forex Restriction on 41 Items (2015): The CBN restricted the importation of 41 items, including rice, pasta, and textiles, in an attempt to conserve foreign exchange and promote local production. However, the policy led to a shortage of these essential items, causing prices to rise and affecting the livelihoods of many Nigerians.
  5. Forex Policy on Importation of Vehicles (2019): The CBN introduced a policy that restricted the importation of vehicles, except for those that were assembled in Nigeria. However, the policy led to a shortage of vehicles, causing prices to rise and affecting the transportation sector.

Some of the reasons why these policies have failed include:

  1. Lack of coordination: The CBN has often introduced policies without consulting with other stakeholders, leading to confusion and inefficiencies.
  2. Inadequate implementation: The CBN has often failed to implement its policies effectively, leading to loopholes and corruption.
  3. Inadequate understanding of the economy: The CBN has often introduced policies without a deep understanding of the economy, leading to unintended consequences.
  4. Lack of transparency: The CBN has often failed to provide clear and transparent information about its policies, leading to mistrust and confusion.
  5. Inadequate regulation: The CBN has often failed to regulate the foreign exchange market effectively, leading to a lack of discipline and a rise in corruption.

Overall, the CBN's forex policies have often been criticized for being ineffective, inefficient, and even counterproductive. The bank needs to adopt a more nuanced and evidence-based approach to forex policy-making to promote economic growth and stability in Nigeria.