Early this week, just the second week in the life of the flexible foreign exchange regime, the policy has slid into revisionism, rejigs and reforms.
First, at the point of take off, the Central Bank of Nigeria, CBN, was forced to abandon its plans to admit only 8 to 10 banks into its Forex Principal Dealership category after some industry stakeholders impressed on it, the implication of the competition of the categorization.
The apex bank had to throw the window open wider to accommodate as many banks as possible.
Next, on Monday while hosting the big business elites, President Muhammadu Buhari, who had endorsed the new forex regime made a full 360 degree reversal and discredited the value of the new order, apparently displeased at the new exchange rate.
Finally, less than 24 hours later we were told by the association of Bureau de Change, BDC, operators that CBN had reversed itself and decided to begin direct sales of foreign exchange to BDCs despite the long and decisive condemnation the apex bank had reeled out while banning them from accessing its forex trade. The CBN had reiterated the ban in the new forex policy.
Who knows what the changes would be in the next few weeks or even days. That is the character of the new forex regime, policy infidelity, and this is what the apex bank can hardly afford.
We recall that just a week ago, several international investor comments alluded to policy stability as a factor that would determine the expectations that foreign investments, one of the key targets and yard sticks for measuring the success of the new policy, would respond positively, to the new regime.
Generally, the foreign investors have applauded the policy but most, , said they will stay away until the authorities demonstrate commitment to sound and credible market regime, with the economy showing signs of recovering from damage inflicted by the 16-month old wrong-headed exchange rate control policy.
While investors welcomed the new forex regime as the right first step, most of them plan to watch Nigeria from the sidelines, probably anticipating a flip-flop. Are we already seeing the flip-flop?
For sure the apex bank had its reasons for the policy adjustments it had effected but we are worried about the extent of the thoughtfulness and consultations in its making.
We empathise with the apex bank for the presidential revolt and we also expect it to be a little more tactical in managing the presidential mind-set which most people see as anti-market. Was he properly informed?
We urge the CBN to immediately begin appropriate damage control to change the ugly face of instability threatening the intended outcome of its well received forex policy.
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