The exchange rate between the naira and the dollar depreciated to N320 on Thursday as the scarcity of the dollar at the parallel market continued to heap pressure on the naira. The CBN had last month shut out parallel market operators from accessing its window blaming them for round tripping.
It appears now that the CBN in conjunction with the commercial banks are looking for their next target. According to the MD/CEO of Access Bank Plc Herbert Wigwe, the bankers committee after its meeting mulled shutting out sale of forex for school fees abroad as well as for those seeking medical treatment abroad.
“We should revisit the educational system and make sure our children go to school locally. Why can’t we revisit the health care system to make sure it works better? he queried, saying, why must we spend so much money on children’s school fees overseas or medical tourism?
We have increased demands for invisibles which typically represent demands for children school fees, medicals and all of that moving on the CBN foreign exchange. The problem with that is that it tends to crowd out the critical foreign exchange that should be used in the real sector for manufacturing to support industries to encourage employment. There were questions as to how far we are going to allow this to go on. Shouldn’t we redirect these resources towards the real sector?. We focused on the real sector in this case with respect to support most of the manufacturing concerns particularly those that utilise local raw materials for production. At this stage of our economy, we need to look at how to stimulate production so that we will be able to provide goods and services to people at minimal cost”.
So essentially, the next target for the CBN in their demand management policy is to restrict dollar sale for those using it to pay for school fees and medicals. The consequences of such a decision will be far reaching and may have negative consequences for the CBN and the current government. Analysts believe, restricting the purchase of forex for whatever reason negates the concept of free markets.