By Myke Uzendu, Abuja
The Association of Bureau De Change of Nigeria (ABCON) has said that Bureau De Change (BDCs) are at the center of Central Bank of Nigeria (CBN’s) exchange rate policies.
The ABCON President Aminu Gwadabe, who disclosed this at a media briefing in Lagos, said that the apex bank has maintained the suspension of forex sales to the BDCs does not lead to revocation of licenses as the operators are still under the purview of CBN regulations.
Gwadabe, said the small retail exchange institutions – BDCs- remain at the center of CBN’s exchange rate policies implementation, hence the need for the regulator and public to continuously support BDCs’ roles in exchange rate stability.
This, he added can be achieved through increased automation of their processes and providing more channels of transactions for sustainable price equilibrium while eradicating rent seeking, currency substitution and speculation.
“I am very confident that Nigeria will in not too distant future, appreciate a stable exchange rate and availability of forex in the local economy as the right people for government policies’ implementation get such responsibility” he stated.
According to him, the CBN Governor, Godwin Emefiele had tried to introduce many policies beyond conventional money supply that are not in line with market realities.
Gwadabe cited the Naira-4-Dollar scheme of N5 bonus for every $1 diaspora remittances as well as the N65 rebate for every dollar of non-oil export proceeds and other incentives as commendable, but require total overhaul with stakeholders’ engagement.
“I am not a prophet of doom and student of continuing naira depreciation but except fundamental goodwill and courage is demonstrated, the naira will continue to suffer loss in exchange for the greenbacks,” Gwadabe maintained. The question on the lips of everyone is that are the banks not having the allocation for invisible transactions?”
While responding to a question on where the BDCs are sourcing forex, he said though some BDCs are lucky to be operating at the international airport and other off-table transactions, majority of them are out of business due to lack or total absence of alternative sources.
“A licensed BDC in Nigeria cannot access oil proceeds, non-oil proceeds and diaspora remittances. We need expansionary regulatory approvals on the scope of transactions and margin reviews,” Gwadabe said. According to him, an average BDC operator licensed by CBN is comatose and heading for extinction.
To strengthen the naira, Gwadabe believes it is time to allow competition and mutually-beneficial engagements among stakeholders and regulators.
He said, “Naira is the most difficult currency to predict in the world because of its vulnerability to leadership corruption, lack of competitive space, and the prevalence of ungoverned players.”
Despite the suspension of FX sales to BDCs, Gwadabe hinted that the apex bank not only supervises the activities of the BDCs but has started nationwide training for the operators to expose them to the vulnerability of money laundering, terrorism financing, and financing of proliferation of mass weapons of destruction.
Gwadabe disclosed that the apex bank has maintained that the suspension of FX sales to the BDCs does not lead to revocation of licenses as the operators are still under the purview of CBN regulations.
“However, the suspension has led to increasing practices of ungoverned space players, crunch liquidity of FX to the retail end of the market and the resultant exchange rate volatility. We in ABCON believe in self-regulatory reforms as sine qua non to lingering exchange rate volatility. ABCON has always been proactive in ensuring BDCs participate and comply with global practices,” he stated.
Gwadabe suggested that it is the right time for Nigeria to embrace the competition model in its huge and sustainable diaspora remittances.
He urged the apex bank to leverage the capacity and skills of the BDCs operators and also reach out to them to enhance liquidity, and price discovery of the diaspora remittances.
“This agitation of stakeholders we will continue to advocate,” he said. “We urge the CBN to embrace our road map and create stakeholders’ engagement,” he said.
Gwadabe added that the diversion of the allocations of BDCs to the banks to enhance liquidity in the retail end of the market and price stability, was still a misnomer if the banks had performed the roles of CBN’s transmission mechanisms.
