BDCs to source forex from oil coys, exporters, others

Days after it announced that it will no longer sell foreign currency to Bureau de Change (BDC) operators in the country, the Central Bank of Nigeria (CBN) says the money changers can source foreign exchange from oil companies, exporters, or other agencies as well as individuals.

This was also confirmed by the umbrella body of BDCs in the country Association of Bureau de Change Operators of Nigeria (ABCON).

Acting president of the association Aminu Gwadabe stated that the modalities for accessing the foreign exchange will be issued to BDCs this week.

CBN director, Corporate Communications Ibrahim Mu’azu, in an interview, said that this is conditional to discipline and transparency on the part of BDCs. He noted that the apex bank is not pleased with the situation where BDC will buy cheap foreign exchange and sell at a higher price.

According to him, Travelex, a recently licensed international money changer, had been able to source for forex through other means and sold forex cheaply while keeping a clean record of all of its transactions.

Gwadabe however noted that the association would ensure that its members keep adequate record of their transactions, assuring that it will adequately regulate its members on price control mechanism.

The value of the naira at the black market had dropped to an all time low of N305 to the dollar last week after the CBN announced that it will no longer sell foreign exchange to the 2699 registered BDCs due to the prevalence of round tripping and gross misconduct amongst them.

While some BDC operators sold between N225 and N230 per dollar to individuals with valid passports, visas and bank verification number, some had hoarded the greenback pushing up the price to as high as N305 in some parts of the country.billion was sold to BDCs, while it sold $43.65 billion to banks through the Retail Dutch Auction.

The association also blamed the infractions of rent seekers, who do nothing but engage in round tripping of foreign exchange and speculative activities to proliferation of BDCs caused by CBN’s licensing as many BDCs as possible; from 270 to about 3000 BDCs.

However, ABCON has urged its members to ensure that they comply with the CBN guidelines on proper and timely returns filling, records keeping and license renewals. Rising from an emergency general meeting at the weekend, ABCON acting president refuted the amount of dollars claimed to have been sold to BDCs.

According to him, out of $48.09 billion sold by CBN less than 10 per cent amounting to $4.4 

He noted that instead of criminalising entire BDC subsector, the apex bank should engage in appropriate regulation by imposing heavy sanction on any operator found culpable of committing any illegality.

“It is pertinent to note that it was a deliberate policy of the CBN to license as many BDCs as possible. For example, in 2014, when the CBN increased the capital base of BDCs to N35 million and caution deposit of N35 million, there was a drastic reduction in the number of BDCs, as out of the 2,500 BDCs in existence then, only 1,800 BDCs were able to meet the new capital requirement.

“The CBN at this point should have suspended or stopped granting new licenses. The management of the CBN for reasons best known to them however chose to continue to issue licenses to new BDCs. The question is, why complain about proliferation of BDCs when you are the one granting the license? There was a time when the CBN suspended issuance of banking licence, why not do the same in the case of BDCs,” Gwadabe stated.

He however stressed that contrary to the impression created by CBN, BDCs are not the problem as they make up only three per cent of the market and are the solutions to deep rooted problems in the market, as they have performed creditably well.