June 29, (THEWILL) – Two weeks after the Central Bank of Nigeria (CBN) announced major forex reform that culminated in the unification of the official and parallel market channels, more Nigerians in Diaspora still prefer the parallel to the official windows in making their home remittances.
A survey conducted by THEWILL within the two weeks of the new forex regime, showed that majority of Nigerians abroad still prefer the parallel market for their home remittances notwithstanding the rate unification that has occurred.
THEWILL had reported that the official window had outpaced the parallel market in Naira depreciation unlike what used to be the case.
Out of 58 respondents who were contacted through phone calls, whatsapp and sms messages, 43, representing 75 percent, said they would continue to patronise the parallel channel; while 11, or 19 percent prefer the official window. They all spoke on the point of anonymity as they would not like to see their relatives “embarrassed”.
Fifteen (15) of the respondents reside in the US, 11 in Canada, 10 in the UK, 6 in Germany, 5 each in Italy and France, 4 in Korea and 2 in South Africa.
Majority of the respondents are indigenes of the South-West, followed by South-East, South-South and the rest.
Among the reasons for preferring the parallel market include the fear of the Taxman. Many of the respondents explained that using the official window could expose them to “hidden” taxes that could be “financially harmful”.
“Nigeria is now a taxing country; every day you see one form of tax or the other. Unlike in the developed countries, you cannot see what these taxes are used for – there are no roads, there is no electricity, insecurity has become the order of the day, government officials are looting the treasury the way they like. So, the government is ready to tax the air the people breathe to enrich those in leadership positions,” said a US-based respondent.
A UK-based Nigerian medical practitioner condemned the level of treasury looting which has resulted in the people being heavily taxed to replenish the empty treasury. She said, “Sending money through the official channel gives the impression that our foreign reserves are growing whereas the economy is producing nothing. One day, they will use the EFCC or the other institutions to go after you or your relatives. I prefer the parallel channel, no matter how low.”
A respondent from South Africa said the parallel market is quicker and saves you the trouble of going to queue in the bank. “The currency traders are there for you at any time of the day. They are easy to reach and they have no time to waste. All you need is a reliable supplier that would not cheat you or sell fake dollars to you.”
Some black market operators in Lagos confirmed that they still receive dollar supply, though not at the huge volume they used to enjoy. “People talk about this dollar thing as if Nigerians will suddenly abandon the parallel market. It is true that the dollar supply has reduced, but we are still getting business contrary to what many would think,” a black market trader at the Murtala Muhammed International Airport road, Ikeja, told this newspaper on Monday.
In a major policy shift, the CBN on June 14, announced the removal of the exchange rate ceiling that saw a 60 percent difference between the official and parallel markets where the local currency exchanged N465/$ and N750/$ respectively.
Naira traded N763/$ at the I&E window on Tuesday, June 27, as against N750 at the parallel market.
Besides rate unification, market turnover has increased tremendously, hitting over $300 million daily as against $70 million it hovered around prior to the reform.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
