By BAYO AMODU, Abuja
The Association of Bureaux De Change Operators of Nigeria (ABCON) has decried a situation whereby more than 700 Bureau De Change (BDC) operators in recent months have been rendered inactive in the Central Bank of Nigeria (CBN) Forex Window.
This, according to the body, has put the sustainability of their businesses under serious threat.
President of the association, Alhaji Aminu Gwadabe, who confirmed the development at the weekend, said the BDC business has been badly affected by uncompetitive rate as the CBN sells dollars to BDCs at higher rate compared to what the regulator sells to commercial banks, yet both institutions target the same market segment and customers.
The BDCs, he said, buy dollar from the CBN at N360/$1 and sell to end users at N362/$1 while the regulator sells to commercial banks at N358/$1 and the banks sell to end users at N360/$1.
The CBN’s approved list showed that 3,389 BDC operators have been licensed to carry out the business and are expected to get $40,000 allocations weekly from the CBN Forex Window. The apex bank disburses about $135.5 million to the 3,389 registered BDCs on weekly basis to sell to forex end users. The funds are needed for settling demands for Personal Travel Allowances (PTA), Business Travel Allowances (BTA), medical needs and school fees payment abroad.
Gwadabe described the buying rate for the BDCs as uncompetitive and a big disincentive for many forex users to patronize the operators. He said the banks and the BDCs operate and service the same market segment, and should get dollars at the same rate to enable both institutions compete favourably.
According to the ABCON boss, the banks enjoy large customer base with the customers able to carry out their transactions by having their accounts debited to cover the cost of purchase. He said such convenience plus a lower rate put the banks at advantage position to attract more customers than BDCs.
He lamented that BDCs are not only buying at exorbitant rate, but also sell at a rate higher than that of the banks hence, creating low patronage for the operators.
Gwadabe advised the CBN to take urgent steps to review the rate at which the dollar is sold to the BDCs as such would boost ongoing recovery of the naira against dollar. The naira has remained at N368/$1 at the parallel market in the last one week, a major improvement from N520/$1 it exchanged last February. He said the success recorded by the CBN in stabilizing the naira was largely contributed by the BDCs which remain backbone of the retail forex segment of the economy.
Gwadabe said the rate challenge faced by BDCs, if not checked, would trigger a liquidity crisis that may derail the ongoing recovery of the naira against the dollar. He said the BDCs will continue to support CBN’s determination to achieve exchange rate stability, and strengthen the value of the local currency against the dollar.
He said downward review of the BDCs rate is critical at present, as it will keep operators afloat to meet increasing forex demand at the retail end of the market.
Gwadabe praised the CBN for liberalizing the forex market and making more dollars available, adding that making the funds readily available in right volumes will double the positive impact of the policies on the economy.
“We are happy that the CBN is liberalising the forex market to ensure that its objective of deepening the market is achieved,’’ he said.
The ABCON boss believes that despite the challenges facing the economy, the CBN and BDCs should continue to work together and find lasting solutions that would help the country resolve the ongoing forex crisis and achieve speedy economic recovery.
He promised that the ABCON will continue to ensure that purchased funds by its members are disbursed to end users and for eligible transactions only even as operators that breach CBN’s regulation on the sector will be severely punished.