Chief executive officer of RTC Advisory Services Limited, Mr. Opeyemi Agbaje has criticized the Central Bank of Nigeria (CBN)’s recently unveiled policy on domiciliary account, saying the policy is not sustainable.
“Given the structure of Nigeria’s foreign exchange market, there is a part of it I do not like; in terms of both the CBN and the banks themselves— Nigerians didn’t force them to come and start the operation of domiciliary account,” Agbaje said in an interview with The Guardian.
“The CBN, the banks and the government of Nigeria, under General Ibrahim Babangida, in those days, passed a law to allow operation of domiciliary accounts; they encouraged us; marketed us to come and operate domiciliary accounts.
“We started operating it based on their regulations. Then, because one day they concluded that they didn’t like it anymore for whatever reason, they accused us of illicit financial flow — I don’t know if some people are doing that, but certainly, the vast majority of Nigerians, including myself, that operate domiciliary account, use it for legal purposes.
“We buy Dollars with our own money, use it to pay school fees for our children, buy goods and services, and transfer money, when we have foreign payment.
“So, if there are people, who use it legitimately, the CBN should have identified those people and not one day, based on their own convenience, suddenly, announce to us that we can no longer operate our domiciliary account. That is the situation we have found ourselves in.
Agbaje, however, said he understands the CBN’s broader challenge, “and that is why one has to be balanced in commenting on these things”.
Speaking further the financial expert warned the CBN to be mindful of the fact that domiciliary accounts is a good and innovative concept that allows multiple sources of dollars.
“I can assure you that by the time it may be three months or less, six months down the line, once this one billion Dollars they are worried about disappears, the banks will start begging us again to bring cash into our domiciliary account, because they will still have the need for Dollar cash,” he said.
On how the policy can affect the country if it continues, Agbaje said “Many firms procure supplies and inputs from abroad through their foreign currency domiciliary accounts. They source Forex in cash and transfer to their suppliers through banks. Their operations may now be impaired further, and this will affect their output, employment and consumption.”