FG urged to ban parallel market FX trading as Naira depreciation worsens
By Kunle Sanni
Amid Nigeria’s ongoing foreign exchange (FX) crisis, Muhammad Jibrin Barde, former PDP governorship candidate for Gombe State in 2023, has urged the Federal Government to criminalize black-market currency trading, describing it as economic sabotage.
In a detailed analysis of Nigeria’s FX challenges, Barde argued that unregulated currency traders play a significant role in the persistent devaluation of the naira. He warned that without decisive action, Nigeria’s economy would remain vulnerable to speculative attacks, inflation, and fiscal instability.
Barde emphasized that no stable economy allows its local currency to be freely traded at the scale seen in Nigeria’s parallel market. He also criticized the Central Bank of Nigeria (CBN) for historically supplying FX indirectly to the black market, claiming this has legitimized a corrupt system that fuels exchange rate volatility.
He explained that each time the Federation Account Allocation Committee (FAAC) disburses funds to federal, state, and local governments, excess naira liquidity floods the system, leading to increased demand for dollars in the parallel market and immediate depreciation of the naira.
“The artificial demand created by currency traders not only fuels corruption but also prevents the exchange rate from stabilizing under market-driven forces,” Barde stated.
To restore stability to Nigeria’s FX market, Barde outlined five key policy measures:
- Classify Black-Market FX Trading as Economic Sabotage: Enforce strict penalties for operators.
- End CBN’s Indirect FX Supply to Parallel Markets: Ensure all foreign exchange transactions occur through regulated banking channels.
- Enhance Oversight: Ensure FX allocations are driven by genuine trade and investment-related demands.
- Implement Stronger Capital Controls: Tighten policies on capital flight and illicit FX transactions to ensure compliance with financial regulations.
- Boost Local Dollar Liquidity: Promote non-oil exports, attract foreign direct investment (FDI), and channel remittances through official banking systems.
Barde also assessed the monetary policies of CBN Governor Olayemi Cardoso, acknowledging efforts to curb inflation and manage exchange rate volatility. However, he noted these efforts are being undermined by excessive government spending and black-market FX activities.
Despite raising the CBN’s Monetary Policy Rate (MPR) to 27.5%, inflation remains high at 34.8% as of December 2024. Efforts to clear Nigeria’s $7 billion FX backlog and boost reserves have also been made, yet the naira’s depreciation persists due to parallel market speculation.
Barde warned that without fiscal discipline, monetary policy alone cannot stabilize the economy.
