Thread by @FinPlanKaluAja1

Been looking at Aboki FX to gauge the response of the Diaspora to the N5 per $1 promotion.

I will come back to that..

Suffice to say I do not believe that promotion will work...

Let talk in a few posts..

Why is the CBN offering a promotion?

In marketing, You have the 4 P's..(now 7). Promotion relates to publicity or advertising...in essence informing a market.

So CBN is informing or enticing the diaspora to remit via Nigerian banks. .

Why?

Because the Diaspora is not

In February 2020, CBN issued tweets and circulars that were inimical to the Diaspoers remittances.

Eg "$ remitted could not be withdrawn as cash". This was later clarified,but the damage was done.

Many believe the CBN is partisan to a strong Naira

nairametrics.com/2020/02/25/u-t…

This uncertainty over $ policy led many to adopt other means of getting $ including Cryptocurrency exchanges.

Technically you remit stable coin via exchange and it's withdrawn in Lagos.

No Dom Acc..

CBN stopped that.

The question is why is there so much $ demand outside the traditional banks and CBN Importers Window?

Simple, CBN has a standing ban on about 44 items from accessing forex including Maize, Milk and Rice.

Thus if I am a maize importer, I need $ but cannot get via a 🇳🇬 bank

If I am doing business in Nigeria 🇳🇬 and need $ for maize, I MUST source forex myself from diaspora, Aboki fx, crypto, friends but not a bank. This means OFFICIAL demand for $ excludes the demand in black market.

CBN governor saying the "parallel market is only 5%" is myopic

Hence as long as 44 items cannot access forex, that demand will be higher than the approved list.

Its simple.

If I had $1000, I can make more selling to a maize importer than to a bank because the maize imported has NO other choice...he cannot go to a bank..so he pays premium

Thus remittances are still coming in...but not via banks.

Nigerians have found many was to transfer $100 from Alabama to Aba because the "Aba" importers of maize CANNOT access dollars from a bank.

That's why Aboki fx rate is higher than Zenith Bank rate.

Hence CBN's promotion of N5 for 1$ remittances, increases OFFICIAL flow but still does not address the 44 item banned.

If CBN Offers N5 the "44 item club" will offer N7 because they have to. They have no alternative.

That why Aboki fx rate went up to N485 from N482

If you have a 10% sales promotion and the other store has a 15% promotion. ..what happens?

It's not rocket science o

Ok solutions?

Why not simply create another window for the "44" and ask tourist, crypto and "Emeka" in Alabama send $ at market rate back to 🇳🇬

Let those funds flow to banks.

CBN can continue to supply the approved list with her reserves.

Let remittances fund the "44"

Essentially banks will be awash again with dollars for the "44", and it will begin to affect the "Aboki fx" rate...possibly equalizing it.

CBN cannot eat her dollars and have it..

Thank you.

(Spoke more on this on my podcast)

the-way-i-see-it.captivate.fm/episode/cbn-na…