BAD NEWS FOR BUREAU DE CHANGE OPERATORS WITH THE CBN NEW POLICY
Addressing journalists on the development in Abuja, CBN Governor Godwin Emefiele said BDCs
must, however, note that the CBN would deploy more resources to monitoring these sources to ensure that no operator is in violation of our anti-money laundering laws.
The CBN also reversed its decision on the deposit of foreign currency in commercial banks, announcing that it will henceforth:
permit commercial banks in the country to begin accepting cash deposits of foreign exchange from their customers.
Both decisions are to take effect immediately.
These measures are not intended to be punitive on anyone or any group; rather, it is meant to ensure that the CBN is better able to carry out its mandate in an effective and efficient manner, which guarantees preservation of our scarce commonwealth, and that our hard-earned financial system stability remain intact to the benefit of all Nigerians.
The apex bank took these decisions because of total disregard of the difficulties that the CBN is facing in meeting its mandate of maintaining the country’s foreign exchange reserves to safeguard the value of the Naira.
The CBN has continued to observe that stakeholders in some of the subsectors have not been helpful in this direction. In particular, we have noted with grave concern that Bureau de Change (BDC) operators have abandoned the original objective of their establishment, which was to serve retail end users who need US$5,000 or less. Instead, they have become wholesale dealers in foreign exchange to the tune of millions of dollars per transaction. Thereafter, they use fake documentations, like passport numbers, BVNs, boarding passes, and flight tickets, to render weekly returns to the CBN.
Despite the fact that Nigeria is the only country in the world where the Central Bank sells dollars directly to BDCs, operators in this segment have not reciprocated the bank’s gesture to help maintain stability in the market.
Whereas the CBN has continued to sell US Dollars at about N197 per dollar to these operators, they have in turn become greedy in their sales to ordinary Nigerians, with selling rates of as high as N250 per dollar.
It is not surprising that since the CBN began to sell foreign exchange to BDCs, the number of operators have risen from a mere 74 in 2005 to 2,786 BDCs today. In addition, the CBN receives close to 150 new applications for BDC licences every month, indicating that some individuals have identified a lucrative business venture that had become a threat to the Naira.
Rather than help the CBN to achieve its objectives for which they (BDCs) were licensed, the Bank has noted the following unintended outcomes: Avalanche of rent-seeking operators only interested in widening margins and profits from the foreign exchange market, regardless of prevailing official and interbank rates;
Potential financing of unauthorised transactions with foreign exchange procured from the CBN;
Gradual dollarisation of the Nigerian economy, with attendant adverse consequences on the conduct of monetary policy and subtle subversion of cashless policy initiative; and Prevailing ownership of several BDCs by the same promoters in order to illegally buy foreign currencies multiple times from the CBN.
More disturbing to the CBN is the financial burden being placed on the Bank and the country’s limited foreign exchange.
Emefiele said:
The CBN sells US$60,000 to each BDC per week. This amount translates to US$167 million per week, and about US$8.6 billion per year. In order to curtail this reserve depletion, we have reduced the amount of weekly sales to US$10,000 per BDC, which translates into US$28.4 million depletion of the foreign reserve per week and US$1.476 billion per annum.
This is a huge hemorrhage on our scarce foreign exchange reserves and cannot continue, especially because we are also concerned that BDCs have become a conduit for illicit trade and financial flows.
Asked why it has proven difficult or impossible to prosecute erring BDCs, Emefiele said the CBN would now look at that possibility but added that:
There are many things that the CBN is mandated to do, we would have lived a situation what people should do is obey and work within extant rules and regulations within which they are supposed to operate and do what is right, but if they begin to do what is wrong, in this case, it becomes a problem. We do not have the resources to cope with over 2,000 BDCs in the country right now.
BDCs not happy with this decision are free to return their licences and get a refund of the N35 million cautionary fees. Besides, we need more people go into other forms businesses like agriculture where we believe there is a lot of scope at this tim
Comments
Post a Comment