BY CHARLES ABUEDE
The continuing free-fall of the Nigerian naira has become worrisome to all concerned, calling for immediate remedies by the monetary authorities and other players within the foreign exchange market. In this regard, the national executive council of the Association of Bureaux De Change Operators of Nigeria (ABCON) said it has established a roadmap campaign blueprint necessary to save the naira from further decline and enhance exchange rate stability.
This strategy, which was unveiled by the council after its recent meeting in Lagos, is to save the local currency, bridge the exchange rate gaps and curb volatility in the forex market.
The naira exchanged at N599 to a dollar at the parallel market last Friday and traded at N415.83 to dollar at the official market creating a rate gap of N183.17 per dollar.
ABCON, led by Aminu Gwadabe, president of the association, said there was an urgent need to enhance dollar liquidity in the market and ensure stability of prices in the economy. These steps, he said, would save the local currency and economy from the impact of election spending that has kept inflation at double digits for a very long time.
Gwadabe further disclosed that the devaluation of the naira against global currencies was due to pressure from rising dollar demand without satisfactory liquidity to meet the demands from retail end users, manufacturers and other key players in the economy.
“The naira has consistently come under serious pressure due to dollar scarcity making it difficult for forex end users, manufacturers and key industry players to access dollars needed to meet their needs. ABCON under my leadership will continue to encourage our members to play the vital role of closing the exchange rate gaps in the market and reducing widening premium between the parallel market and the official window,” he said.
However, Gwadabe listed several factors that continue to undermine the naira stability and the local currency’s value against other currencies as he called for the creation of BDCs’ Autonomous Foreign Exchange Trading Window (BAFEX) with determined maximum daily limit for legible BDCs to access dollars from banks, autonomous market and diaspora FX widow at the prevailing market prices.
Not enough from the yearnings of the association, it is requesting for the enhancement of existing BDC automation portals to file transaction returns on CBN/ABCON/NFIU/NIBSS portals for effective regulatory monitoring and supervisions which is also part of their hunt for the creation of an automation portal to encourage registration of undocumented and unlicensed operators for effective monitoring, identification and tracking of their transactions.
Gwadabe said the foot-dragging of the Central Bank of Nigeria (CBN) to open new windows through which foreign exchange can be enticed to the economy remains a key factor precipitating the continued fall in the naira as the executive body cited that the non-inclusion of BDCs in the list of channels through which diaspora remittances flow to Nigeria, under the CBN’s guidance and regulation, has reduced the volume of dollar inflows to the economy.
According to him, a World Bank’s latest Migration and Development Brief showed that sub-Saharan Africa attracted $49 billion in remittances inflow in 2021 while projecting that the officially recorded remittance flows to low- and middle-income countries are expected to increase by 4.2 percent this year to reach $630 billion while the SSA region will hit $53 billion in 2022.
Meanwhile, Nigeria’s contribution to the remittances fund, according to Gwadabe, is expected to rise when BDCs are allowed to receive funds from Nigerians in Diaspora into the economy as he emphasised that BDCs are to perform this role through contactless and digitised channels that make collections easy and seamless.
“There is an urgent need to review the guidelines on BDC’s Scope of Operations to include participation in payment space, such as agency banking, Point of Sale (PoS) services, inbound and outbound forex transfers, ATM forex services, to reflect global business model practice. BDCs should be allowed to access dollars or diaspora remittances through the autonomous forex windows that enable operators to receive IMTOs proceeds, carry out online dollar operations and Point of Sale (PoS) agency, among others.
“The BDCs should be able to operate a network of digital solutions for PTA/BTA. This would reduce overheads, and improve profitability. Some BDCs might still consider working closer with commercial banks. The ABCON can also be recognized as a self-regulatory organisation to enable it to operate effectively and sanction erring members. We wish to reiterate our resolve to align with the policy thrust of the apex bank and ensure that ABCON members play their roles professionally and strategically in the interest of the market and economy,” Gwadabe said.
The ABCON boss also called for the establishment of training institutes to enhance capacity and infrastructure in the industry and broaden players’ business scope with cash-back incentives for those that patronise BDCs while also implementing a less cumbersome and complex documentation requirements for end users as he insisted that now is the time to break the current industry monopoly that puts the remittances market in the hands of few players depriving others from tapping into the plan.
He also reiterated that the recognition of the role of BDCs in the Nigerian financial sector remains the first step to building a sustainable and viable forex market that is comparable to what is obtainable in other developed economies.