Emmanuel Ukudolo
January 12, 2016 – Central Bank of Nigeria(CBN) has blamed operators of Bureau De Change(BDC) for the free fall of the Naira against major international currency.
Consequently, the apex bank decided that it would no longer sell forex to BDC, leaving them to source wherever, they may find it.
At a press briefing, CBN Governor, Mr. Godwin Emefiele said it will in the meantime allocate forex for people who have Matured Letters of Credit from Commercial Banks, for import of petroleum products, critical raw materials, plants and equipment and payment for school fees, BTA, PTA and related expenses.
He said the bank took the decision to avoid further depletion of the Foreign Reserve, which has dropped to $28 billion from $37.3 billion in 2014.
“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’, he said.
Emefiele noted that despite the fact that Nigeria remains 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 Bank has continued to sell US Dollars at about N197 per dollar to these operators, they have in turned become greedy in their sales to ordinary Nigerians, with selling rates of as high as N250 per dollar. Given this rent-seeking behaviour, 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 licenses every month”, the apex bank said, adding that rather than help to achieve the laudable objectives for which they were licensed, they have become 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 unauthorized transactions with foreign exchange procured from the CBN.
