The Association of Bureaux De Change Operators of Nigeria (ABCON), lede by Aminu Gwadabe, has called on the Central Bank of Nigeria (CBN) to use the segment of the FX market as a tool to put an end to the multiple rate practices with the aim to usher in stability in the forex market.
Notwithstanding the efforts to attain stability in the currency market through various interventions by the apex bank to save the Naira from plunging further, the foreign exchange backlog at the moment remains unabating and various policies of the CBN on the operation of the sub-sector continues to be inhibitive and limiting BDCs’ from providing their perceived roles in the forex market and economy.
The operators hinge their call on collaboration between the BDCs and the CBN in the implementation of market-friendly policies that will make the BDCs impact more positively in the market and promote exchange rate stability in the economy.
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The operational manual of the CBN defines the BDCs as small retail end institutions licensed to carry on the business of selling Personal Travel Allowance (PTA), Business Travel Allowance (BTA), school fees, and medical bills payment abroad, among other roles, at the critical retail end of the foreign exchange market.
Nearly 12 months after the CBN, following its Monetary Policy Committee meeting at which it decided to clip the wings of the BDCs with the decision to halt FX sales to the segment of the market as a result of illegal trades of the currency and other forms of touting that created dollar scarcity, several efforts by the apex bank to save the currency from further fall appears to have proved abortive.
Gwadabe has said the hasty generalisation that criminalises the BDC sub-sector as responsible for all market crisis and infractions like selling dollars with higher premium above regulatory limit, promoting a loss of confidence in the near, and multiplicity of the exchange rates is not in the best interest of the market and economy.
He said: “It is in view of this disturbing situation and the need to strengthen BDCs value chain as obtainable in organised climes that we urge the regulators and policymakers to consider BDCs as the most potent tool in liberalising the foreign exchange market and stopping multiples exchange rates in the system.”
He explained that the BDCs have since 2006, provided policymakers with a window to achieve their mandate of exchange rate stability and price equilibrium. He, therefore, called for the reintegration of the BDCs into the forex market ecosystem to sustain their roles in the economy.
For a better context, the introduction of the Investor’s & Exporter’s (I&E) FX window in 2017 as a result of agitations from stakeholders like ABCON, foreign investors, and Nigerians in Diaspora who advocated for it to allow more dollar inflows to the economy to boost foreign reserves, and raise confidence in the naira by addressing widening rate premiums.
He said: “In order to address the challenges facing the forex market, now is the time to integrate BDCs into the market activities as agents of stabilisation and delivering the market to the promised land.”
On how ready the BDCs are for the responsibility, Gwadabe said the operators have for years been preparing for a time like this by integrating technology into their operations and promoting efficiency and transparency in their businesses. According to him, the BDCs will continue to comply with the rendition of suspicious transaction reports as directed by NFIU, CBN, and EFCC through constant training of their directors and sanctioning of erring operators.
“In compliance with the provisions of Bank and Other Financial Institutions (BOFIA) as amended, every BDC renders returns to the CBN in prescribed format and within the deadline stipulated by the CBN. The records of the BDCs are made readily available to the CBN examiners as and when requested including carrying out customer due diligence, corporate governance, and tax returns,” he said.
He said that ABCON has over the years established itself as a key player in the BDC industry, and made several commitments and sacrifices to ensure that the sector continues to thrive against all odds.
Gwadabe said that BDCs have achieved major success with operational digitization as operators have been empowered to file their weekly, monthly, or quarterly reports from anywhere without clustering at CBN’s offices.
He said ABCON digitised BDCs operations with the official launch and take-off of the ABCON Live Run Automation Portal in Lagos, which has the backing of the CBN and has ended decades of manual filling of regulatory reports by BDCs and enhanced the global competitiveness of operators. The portal, which is a game-changer in the Nigerian BDC Industry, is in the final phase of automating all BDCs’ operations and integrating them with the operations of CBN, NFIU, and Nigeria Inter-Bank Settlement System (NIBSS) for improved compliance with regulation and seamless operations in line with global best practices.
Gwadabe reiterated ABCON’s commitment to boosting liquidity in the forex market, fulfilling its regulatory mandate of bringing forex closer to the end-users and supporting the CBN’s goal of achieving sustainable exchange rate stability.
“We, therefore, conclude by urging the regulators to consider our proposal for the creation of Bureaux de change Autonomous Foreign Exchange Market (BAFEX) to replicate the I&E window initiative, and address concerns of stakeholders like Nigerians in Diaspora, foreign investors, international financial institutions stability of the market,” he said.
Such a move, he added, will help in curbing illegal online operators and integrate the various unlicensed market operators across the country towards achieving price equilibrium, transparency, competitiveness, and an end to wider premium.
“The BAFEX will prevent currency substation, hoarding, illegal cash evacuation through the porous borders and above all reduce to the barest minimum, the twin effects of flexible and managed float (fixed) exchange rate systems in the economy,” he said.