The illegal importation of foreign currency in Nigeria is impacting on the country’s fragile economy, prompting the CBN to introduce new regulatory restrictions on foreign exchange
The all-too-common practice of money laundering and illegal currency importation in Nigeria is proving a threat to the country’s economic stability, prompting the Central Bank of Nigeria (CBN) to introduce measures to prevent the importation of foreign currency without the bank’s prior consent. The policy, introduced and implemented on October 1, comes as Nigeria has seen vast sums of foreign currency enter into circulation without being declared – the so-called dollarisation of the African nation.
The central bank claims that Nigeria has become the largest importer of US dollars worldwide, with prior regulatory restrictions having fallen far short of the necessary clout to curb illegal imports. With a great many emerging currencies having fallen foul to a changing global economic climate of late, the CBN will be hoping these new measures will better protect the ailing naira.
The move follows the CBN’s impromptu decision to revoke the licences of 20 bureaux de changes after they were discovered to have been buying and selling large sums of US dollars without authorisation to do so.
The bank’s efforts to stabilise the naira will no doubt go some way in protecting against money laundering in Nigeria, which remains a huge problem for the country and a hindrance to its wider economic development. Writing on the IMF website, the organisation’s Deputy Managing Director Min Zhu claims, “Money laundering and the financing of terrorism are financial crimes with economic effects. They can threaten the stability of a country’s financial sector or its external stability more generally. Effective anti-money laundering and combating the financing of terrorism regimes are essential to protect the integrity of markets and of the global financial framework as they help mitigate the factors that facilitate financial abuse.”
The bank’s attempt to crack down on illegal currency importation – it hopes – will temper inflation, keep interest rates low and stabilise the naira, facets that could prove vital in strengthening the country’s fragile economy.