IN a bid to halt the naira freefall and put a stop to the dollarisation of the Nigerian economy, the central bank has revoked the licenses of 4,173 Bureau De Change operators.
In a statement seen by Economy Post on Friday and signed by Acting Director of Corporate Communications, Ms Hakama Sidi Ali, the Central Bank of Nigeria (CBN) said its act was in line with powers conferred on it by the Bank and Other Financial Institutions Act (BOFIA) 2020, Act No 5, and the Revised Operational Guidelines for Bureau De Change 2015 (the Guidelines).
As seen on the CBN website, some of the BDCs whose licenses were revoked are: 10-20 Times BDC Limited, 1717 BDC Limited, 19TH BDFC, 8-Twenty Four BDC Limited, 2017 BDC LTD, 2019 BDC LTD, and 2022 BDC LTD. Others are: A & C BDC Limited, A. A. Funtua BDC Limited, A.B.S BDC Limited, Abas BDC Limited, Account TO Account BDC Limited, among others.
CBN’s new policies
The central bank has launched reforms aimed at sanitising the BDC sector, Economy Post earlier reported.
Under the new guidelines, there are Tier 1 and Tier 2 BDCs.
A Tier 1 BDC has the powers to exercise supervisory oversight over its franchisees. All franchisees must have franchisors’ names, branding, technology platforms and rendition requirements, including a minimum capital requirement of N2 billion.
On the other hand, Tier 2 BDCs will operate only in one state or the Federal Capital Territory (FCT) and may have up to three locations: a head office and two branches. This is, however, subject to the CBN approval and the minimum capital requirement of N500 million.
BDC operators are prohibited from engaging in street-trading, maintaining an account for any member of the public and accepting any asset for safe keeping/custody.
They cannot take deposits from or grant loans to members of the public in any currency and in any form and cannot retail foreign currencies to non-individuals, except for business travel allowances (BTA).
They also cannot carry out international outward transfers, engage in off-shore business or maintain foreign correspondent relationship with any foreign establishment.
More so, BDC operators cannot open or maintain any account with any bank or financial institution outside Nigeria.
Sellers of the equivalent of $10,000 and above to a BDC operator must declare the source of the foreign exchange and comply with all AML/CFT/CPF regulations and foreign exchange laws and regulations, the guidelines say.
Dollar sales
The central bank, on February 27, announced plans to sell foreign exchange worth $20,000 to each eligible BDC operators across the country.
In a new circular issued and signed by the Director, Trade and Exchange Department, Mr Hassan Mahmud, entitled, “Sale of Foreign Exchange to Bureau de Change Operators to Meet Retail Demand for Eligible Invisible Transactions,” the central bank said this was targeted at rectifying the persisting distortions in the retail segment of Nigeria’s foreign exchange market and bridging the big gap in the exchange rate.
The central bank said, “All BDCs are allowed to sell to end-users at a margin not more than one per cent (1 per cent) above the purchase rate from CBN.”
“All eligible BDCs are directed to make the Naira payment to the designated CBN Foreign Currency Deposit Naira Accounts and submit confirmation of payment, with other necessary documentation, for disbursement at the appropriate CBN Branches ABUJA, AWKA, LAGOS and KANO,” it noted.
EFCC raid to continue
Due to the success of the operations of the Economic and Financial Crimes Commission (EFCC) in the past two weeks, Economy Post learnt that the anti-corruption agency will continue their raid on BDCs next week.
“Yes, the raid will continue from next week. We will not relent until we bring sanity into the market,” a source at the EFCC told Economy Post.
The dollar weakened from N1,900 to less than N1,300 in late February due to the CBN’s clearance of several obligations and the EFCC raid on BDCs who are seen as sabotaging the Nigerian economy.
Our correspondent visited the Airport Road BDC centres in Lagos on February 27 and found operators scampering for safety on the news of the impending raid by the EFCC officials. Operators did not sell or buy currencies in the open for a few hours for fear of being nabbed by the anti-corruption agency.
At NAHCO on the Airport Road, only few BDC operators were sighted in the afternoon of February 27, as they claimed the EFCC arrested one of their prominent members.
At Zone 4 in Abuja, BDC operators told Economy Post at 12.14pm on February 26 that the raid was affecting both foreign exchange supply and sales.
“The market is somehow now because of the arrest by the EFCC. People are not selling, and foreign currency rates are falling,” said one of the BDCs, Mr Abdullahi Kure, who noted that “we are being blamed for what we are not responsible for.”
Currency experts say the strengthening of the naira due to the EFCC raid is just a temporary relief, urging the Nigerian government to begin to think long-term, rather than devise a knee-jerk response to the naira depreciation.
An economist, Mr Ebun Oduluje, said the raid on BDC operators was akin to “using the wrong medicine to treat an ailment,” stressing that the strengthening of the naira against other major currencies at the moment was just a “temporary relief for policy makers.”
“Will the naira continue to strengthen against the dollar and other currencies as a result of the activities of the EFCC? Well, it depends. If the action will be backed by consistent dollar supply, then, fine.
“But I do not see how sustainable that action is in economic terms. The major problem is not the BDCs, but the fact that we are not earning enough dollars. It is not different from the utterance of the former CBN governor, Mr Godwin Emefiele, who blamed Aboki FX (a platform providing currency information) for naira depreciation,” he said.
