Squandering Nigeria’s Dwindling Forex

RingTrue By Yemi Adebowale

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Officials of the International Air Transportation Association (IATA) were again at the National Assembly last Monday to make a case for the release of foreign airlines’ “trapped” $700 million, at a forum organised by the Speaker, House of Representatives, Femi Gbajabiamila. The governor of the Central Bank of Nigeria, Godwin Emefiele and Aviation Minister, Hadi Sirika were also at the event.

When these airlines say they have $700 million “trapped” in Nigeria, one would think that they are being prevented from taking out $700 million they made from ticket sales. This is far from it. What they are asking for is for the proceeds of their ticket sales in Naira to be remitted to their countries at the official (concessionary) USD rate, which is now N441.67/$1. The market rate is currently N765/$1. The backlog these airlines have is what they valued at $700 million.

At the stakeholders’ forum in Abuja, Emefiele was happy to announce that the aggrieved international airlines in the country would get $120 million at the end of this month to offset part of their funds trapped in the country: “The trapped funds will be disbursed in bits. They’ll get $120 million on October 31. Everyone is calling on CBN to release blocked funds, and I am doing everything I can to provide Dollars for you to repatriate your money. We used our discretion to allocate $265 million to the foreign airlines, broken down into spot and forward. We did $110 million on the spot and the rest in 60 days forward.

“On that day, we allocated to IATA $32 million through UBA. Qatar Airways, $22.8 million through Standard Chartered; Emirates, $19.6 million through Access Bank; British Airway, $5.5 million through GTB; Virgin Atlantic, $4.8 million through Zenith and others. This is something I have told you (foreign airlines) that we will continue to do so that you will not blackmail the country. $120 million will be due on the 31 of October.”

That’s Nigeria’s CBN governor apportioning scarce USD to the foreign airlines. This is happening in a country where manufacturers are struggling and hardly get 20 per cent of their forex requests from the CBN. Just a few days back, the Paint Manufacturers Association of Nigeria decried the scarcity of foreign exchange for manufacturers, adding that some producers are closing factories.

Of course, for years, the Nigerian government has been giving foreign airlines access to official forex to remit ticket sales. It is one of the ways this government and previous ones have been squandering Nigeria’s inadequate forex. By giving foreign airlines forex at concessionary rate, it means the Nigerian government has been subsidising foreign air travels. This is preposterous. A serious government won’t be subsidising foreign air travels.

Another annoying thing about forex allocated to foreign airlines at concessionary rate is that it hardly reflects in calculating fares for Nigerians. The exploitation of Nigerians by these foreign airlines has been on for too long. The truth is that Nigerians pay more than Westerners (even more than some African countries) for flights of similar distance. For instance, it is cheaper to travel from New York to London, a distance of over eight hours, than from Lagos to London, a distance of about six hours. Those flying from South Africa to London (nine hours) are paying less than Nigerians flying six hours to London. Their concealed excuse for charging Nigerians more is that it takes a long time to repatriate ticket sales revenues from Nigeria.

Foreign airlines charge Nigerians using rates close to that of the parallel market and thereafter, get forex at the official rate from the CBN while repatriating revenue from the ticket sales. Is this not theft? It is depressing that the Nigerian government is encouraging this. I clearly remember that at the first stakeholder forum in Abuja on October 17, the Chairman of a Nigerian airline demanded for the exchange rate used by foreign airlines in calculating fares for Nigerians. They could not provide an answer.

The way forward is simple. Foreign airlines should be allowed to sell tickets in USD. It will be a win-win for everybody. Competition along this line will push down fares. Travellers will get a good deal. The pressure on the CBN to provide forex at official rate to cover ticket sales of these airlines will also end. It does not make sense for the Nigerian government to be subsidising overseas travels amid dwindling forex earnings and more pressing needs.

Another manner through which the federal government has been squandering Nigeria’s forex is the allocation at concessionary rate for payment of overseas tuition fees. The government has simply been subsidising tuition fees for Nigerians studying abroad. It has been on for so long. Some Nigerians even send their children to European and North American countries for primary and secondary education and get official forex for tuition from the CBN. Back then, you would search hard before finding parents who send children abroad for primary and secondary education. Nowadays, a sizeable amount of the foreign exchange requests Nigerian banks receive for school fees are for primary and secondary school education.

Well, I’m not against people sending their children to foreign schools. But a good government must not be seen subsidising foreign education. It must not be seen subsidising the rich to send their children abroad for education. By doing so, it means this country does not have a good government. Those who want education abroad must not put pressure on the official forex. They should source their forex from the parallel market. Unfortunately, most of those running governments at all levels are involved in “education abroad” for their children. So, they are very happy subsidising it and putting pressure on Nigeria’s forex.

I have also been worried about the Personal Travel Allowance (PTA) and the Business Travel Allowance (BTA) doled out to Nigerians at official rate. The maximum amount for PTA and BTA is at present $4,000 per quarter. This also amounts to subsidising all manner of foreign trips. Somebody is going on holiday and getting forex at official rate! What is the business of the government with this?

There is also the issue of round-tripping because of the huge gap between the parallel market rate and the official rate.

Some people simply collect PTA and BTA to resell and make profit. At a point, the CBN instructed banks to publish the names and Bank Verification Numbers (BVN) of customers who abuse its forex policy. The apex bank lamented that it had received, and noted with concern, reports of sharp practices “by some unscrupulous customers,” circumventing the new CBN policy on the sale of forex for overseas personal and business travels”. The bank said some of the unwholesome practices included the use of fake visas and cancellation of air tickets after the purchase of PTA/BTA.

Travellers must return unused PTA/BTA within two weeks as stipulated in the customer declaration form signed by them, so says the CBN. If not utilised for the intended purpose, or if for any reason, the scheduled trip is cancelled, the PTA/BTA must be returned. So, Emefiele and his men expect Nigerians to return unutilised PTA/BTA? Also, in this regard, banks are expected to have financial crime units and operate like EFCC and the Police. The CBN is being unrealistic. PTA and BTA at official rates must end for Nigeria to progress.

The era of multiple forex exchange rates must likewise end in Nigeria for this country to optimally utilise its forex. The IMF and the World Bank have persistently told the Nigerian government this. Government forex must be sold at market rates. This will naturally eliminate sharp practices in the purchase of official forex, the PTA/BTA inclusive. A country struggling with forex can’t be selling the limited amount it has at dubious rates. But this is happening in our country with declining external reserves which stood at a disturbing $37.52 billion as of 25th October 2022.

Frightening Figures of Killings

The Council on Foreign Relations of the United States of America, an independent and nonpartisan think tank, has a project called Nigerian Security Tracker that keeps a tab on killings by terrorists in Nigeria based on media reports. It has been doing this for years. This week, it released a report on killings covering the ongoing President Buhari years – May 29, 2015 and October 15, 2022. The figures are gory. No fewer than 53,418 Nigerians lost their lives to non-state actors during this period under review. These are the reported cases. The figures are clearly much higher than this. But let’s restrict ourselves to this for now.

The North-east and North-west recorded the highest killings in this period under review, obviously because of the large number of terror groups in these places. North-east recorded 23,106 killings, with Borno State alone recording 18,213 deaths. No fewer than 13,590 persons were killed in the North-west, with Zamfara State leading with 6164 killings.

Nigeria has been experiencing unprecedented insecurity under the Buhari government. That’s what these figures reemphasised. If the Buhari government is indeed people-oriented, I expect that by now, it would be proactively-responding to these gory figures. So far, nothing has happened. I doubt if anything positive will happen with Buhari as the captain of the Nigerian ship. He lacks the capacity to tame insecurity in Nigeria. It was for this reason that some frustrated federal lawmakers recently threatened to impeach the President.

So sad that terrorists are roaming freely in beloved Nigeria. Last Saturday, they entered Mamman Suka in Gwadabawa Local Government of Sokoto State and operated for hours unhindered. They killed two persons and abducted 13 others. According to the LG Chairman, Aminu Aya, the terrorists operated freely for hours without resistance. That has always been the pattern across Nigeria. Nigeria is indeed in a big mess.

Plight of Ekiti State Pensioners

The new Governor of Ekiti State, Biodun Oyebanji, has promised to correct the ills and bad governance by past administrations in the state, while at the same time talking about continuity. Continuity of garbage? Oyebanji is obviously a confused person. The Ekiti State Chairman of Nigeria Union of Pensioners, Joel Akinola, rightly noted that the governor must be selective in his much-emphasised continuity, saying, “You can only continue with what is good; don’t continue with bad governance.”

I doubt if Oyebanji will be different from previous hopeless governments in Ekiti State. I see him as “same of the same.” I’m hoping he will prove me wrong. Oyebanji should start by first addressing the plight of the state’s pensioners. The Fayose and Fayemi governments really messed up these seniors. They pummeled them with so much venom for daring to serve the state.

Akiola, leader of the pensioners puts it precisely: “We have arrears of unpaid gratuities, about N40 billion that past governments have refused to attend to. Local government pensioners were last paid gratuities in 2012, some of which are still outstanding, while state pensioners were last paid gratuities in 2013. The government is owing local government pensioners seven months’ pension arrears while state pensioners are owed three months’ pension arrears. This is beside the non-adjustment of our pensions.

“We have pensioners still receiving N4,000 monthly. At the close of the Fayemi administration, we had lost over 300 pensioners to death for his refusal to pay our gratuities and pensions. We have more than 400 bedridden because they cannot access medical facilities and, as well, lack money to properly take care of themselves. Fayemi began non-payment of gratuities to pensioners during his first tenure. His successor, Fayose built on what he met on the ground, and Fayemi returned to consolidate it.”

My dear Oyebanji, posterity will not forgive you if you fail to swiftly address the plight of Ekiti pensioners. The blood of those that died waiting for pension and gratuity are on the heads of your predecessors. I hope you don’t want this to happen to you?