By Dayo Omoogun
When the CBN launched the Nigerian Foreign Exchange Code in January 2025, it heralded a new dawn in the management of the sector – a novelty in the over 65 years history of the bank which was warmly welcome by stakeholders, many of whom believed it was long overdue.
As the Governor of the Central Bank, Olayemi Cardoso clearly enunciated at the launch, the event marks a departure from the ‘business as usual’ approach to a new dawn with clear goals of inculcating, entrenching and enforcing global best practices in the sector in order to guarantee sanity, safety and economic security. Though modelled after the Global Fx Code, one very laudable feature of the guidelines is that it has factored in the lessons from our national economic journey as critical ingredients of its preparation.
“The Fx code represents a decisive step forward, setting clear and enforceable standards for ethical conduct, transparency and good governance in our foreign exchange market. It is a firm signal that business- as- usual will no longer suffice. It is also a blueprint for the future grounded in the hard lessons of the past”
“We must not forget where we are coming from. The era of multiple exchange rates, which created privileges for a select few at the expense of most Nigerians, severely undermined market integrity.
“Similarly the period of unprecedented ways-and- means-financing inflicted significant damage on our economy, contributing to inflation, currency depreciation, and eroded public confidence.
“These practices must never return. The Fx code is a firm rejection of such distortions and an equally firm commitment to a future defined by fairness, trust and market driven principles.
In a nutshell, the above quotes from the speech of the governor at the launch captures the essence of the introduction of the code which can be further described as an intentional, well-thought-out strategy to break up with our shoddy past.
The code, built upon 6 pillars viz, Ethics, Governance, Execution Information Sharing, Risk Management and Compliance as well as Confirmation and Settlement Processes leaves little or nothing to chance in its pursuit of transparency, credibility and stability and this is quite commendable. The value of confidence restoration which the code brings into the market is huge and many players are already attesting to it.
However, the tautness of the code notwithstanding, the CBN must recognize the fact that our history as a nation is replete with fantastic policies which are soon circumvented and jettisoned and many times with the active or remote connivance of the original proponents of such policies.
The impact of any policy or code depends very much on the level of the players’ compliance and the readiness of the regulator to enforce same. Experience has shown that some people, like Lot’s wife, have a tendency to remain stuck in the past especially when the old order was somewhat ‘beneficial’ to them. The apex bank must prepare ahead to meet such recalcitrant players with the full weight of their enforcement arsenal.
Offenders, whether among the players or among those of the regulatory establishment who aid them, must not be allowed to revel in their mischief as obtained in the recent past.
It is important for Nigerians, particularly the stakeholders to own the code thereby making compliance easy. Luckily there are some healthy signs in that direction.
For example it is gratifying to note that most players in the sector are at one with the apex bank on the introduction of the code. One of such bodies is the Association of Bureau de Change Operators of Nigeria.
Speaking to interfacenewshub, an online media operating from Abuja in reaction to the development, Dr. Aminu Gwadabe, the President of Association of Bureau de Change Operators of Nigeria welcomed it as a step in the right directionCofirmation and Settlement. He explained that trust is very critical in the foreign exchange market.
“It is a market that has high sensitivity in terms of several considerations. If you have that kind of market and it is still not streamlined- there is no trust, no confidence , no professionalism, no ethics, you are as good as having a market that is heading for doom”, Gwadabe said.
He continues,” So it has to be clean, it has to be trusted and it has to be transparent. So, seeing a lot of unethical, unprofessional transactions, CBN as part of its regulatory mandate had to set up guidelines and … that was undertaken as an oath by all compliance officers of all banks.”
Gwadabe stated categorically that the code has been long overdue. He however advised that the CBN should emplace reasonable margin that is not only sufficient to cover cost but also provide for return on investment to guarantee going concern status. He counsels that this will make players to be less disposed to adopting sharp practices.
Dr. Samson Simon, the Chief Economist of ARKK Economics and Data Limited who also spoke to our medium also commended the CBN’s introduction of the code. He quickly added however that a lot needs to be done to boost production and export which will ultimately boost forex availability.
The Cardoso-led Central Bank must be commended for consistently refocusing the bank on its core responsibilities and prioritizing ethics, professionalism and standards.