By Akin Akinremi
The resumption of sale of foreign exchange to Bureau De Change operators in the country may soon see dollar appreciate in all the segments of the foreign exchange market. The involvement of BDCs, according to the Central Bank of Nigeria, is to bring in critical stakeholders in the forex market to participate in driving its vision for a greater flexibility in the nation’s new exchange rate policy. It came as a shock to stakeholders and analysts in the country last week when CBN issued a statement, announcing that the banned BDC operators can now access forex through a window created for them by the apex bank under the flexible exchange rate regime, which started a month ago.
The CBN last week said the BDCs could now buy forex directly from the banks at a rate that is reasonable and sell to end users at a rate that should not be above two percent margin of the buying rate. The statement further pointed out that the authorised dealers should not sell more than $30,000 per week to the BDCs, which still retain what they had been getting before CBN placed a ban on them. BDCs shall nominate their preferred bidders or banks to procure the said amount from banks in a week while the selling rate by the dealer to BDCs should be the buying rate from International Money Transfer Operators (IMTO) plus a margin not exceeding 1.5 percent. Also, CBN further directed that BDCs should be rendering a weekly report of purchases from authorised dealers to its Trade and Exchange Department.
Meanwhile, the funds purchased by the BDCs should be eligible for Business Travel Allowance, Personal Travel Allowance, Oversees School Fees and Oversees Medical Fees.
With the latest directive of the apex bank, CBN seems to be pinning its hope of a rebound of Naira on the BDC operators, which it had earlier blacklisted as the group hindering the efficacy and growth of Naira some months back. Is the rejected block now the cornerstone of the construction? Are the BDCs the group to salvage the forex market?
WESTERN POST spoke with some analysts on the new development and the involvement of the BDCs in the new foreign exchange policy. Mr. Sewa Wusu, formerly of Sterling Capital, said CBN should not be blamed for the decision taken last week. He said: “The policy may appear inconsistent given the last directive to BDCs to source their Forex autonomously. The current pressure on the Naira may have warranted the CBN to reconsider a new policy, authorizing dealers to sell $30,000 per week to BDCs. I think this was done to douse or reduce the pressure on the FX market so that the demand by retail end users might be met. The intention, I think, is to reduce pressure and ensure that lower end demands are met. The current development and the reality on ground has necessitated the need to reverse previous directives. The economy is still constrained by huge Forex demand of which the recent flexibility policy might take some time to solve. The issue is still Forex supply.”
President of Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, said nearly 3,000 BDCs were expected to access dollar from the CBN. He said BDCs had on Wednesday funded their accounts with the CBN in readiness for the transaction, adding that dollar disbursement would start on Wednesday and continue till next week. He said: “Our members had funded their accounts with CBN and will get the dollar equivalent same day”. The funds, according to him, will be sold at the prevailing inter-bank rate with one percent commission, which had been agreed upon by them and the regulator.
Gwadabe said all BDCs would abide by the directives of the CBN and continually provide detailed reports on how previous dollars sourced from the CBN were utilised. The ABCON boss said the naira exchange rate against the dollar “is expected to crash as our members have access to the green back”. He said the naira exchanged at N389 to a dollar at the parallel market last Wednesday following the involvement of the BDCs, adding that it is expected to strengthen in the coming weeks as CBN’s intervention continue to calm the market. Gwadabe said although BDCs were happy with the resumption of dollar sale to operators, they are also requesting that the CBN open more windows for them to operate.
“We want more windows to be opened for BDCs instead of restricting it to Diaspora Funds. We are happy we can now access the Diaspora Funds, but we want the CBN to do more. We are confident the sale of Forex to BDCs will continue to calm the market down”.