Currency traders under the aegis of the Association of Bureau De Change Operators of Nigeria (ABCON) have advocated some measures aimed at curbing the continued depreciation of the naira. This follows the current crisis in the foreign exchange market which is characterised by dollar shortages, speculative trading, hoarding and other illegal activities by currency traders.
These measures were contained in the ABCON Quarterly Economic Review for the 3rd quarter of the year (Q3’21), and seen by Nairametrics.
ABCON noted that recent developments in the foreign exchange market have proved that the suspension of dollar sales to BDCs is not the solution to the continued depreciation of the naira in the parallel market. It added that the continued depreciation of the naira has also proved that BDCs are indispensable in Nigeria’s context of foreign exchange market.
What ABCON is saying
Some of the measures being advocated by ABCON to help address the continued depreciation of the naira include a call on the Central Bank of Nigeria (CBN) to restructure the BDC sub-sector. It also called on the CBN to resume dollar sales to the public through BDCs especially in view of the failure of the intervention through Deposit Money Banks to bridge the gap between the official and parallel market exchange rate.
The Association stated, “Industrialists have reported increased scarcity of foreign exchange in the system since the stoppage of intervention to BDCs which is an indication that, irrespective of the anomaly observed in the operations of BDCs, part of the allocation to the sub sector flows into the real sector. Thus, it is logical to consider restructuring BDC operations to weed out the dysfunctional units and operators bringing out the real outfits for operational efficiency. These can be achieved through the design of a dynamic operational modalities of standard practices
“The refined outfits can effectively operate on independent transparent platforms dealing in autonomous funds in the economy. They should be permitted to operate as a fully independent foreign exchange professional under the best practices in international foreign exchange operations. Medium scale dealers in foreign exchange should be permitted to operate a lower platform to the Investors and Exporters (I&E) market under a transparent clearing house modalities.
“The market or platform will compete for funds in the global foreign exchange market thereby deriving a merger and stability in exchange rate in the economy. This is a basic solution to the divergent and multiple exchange rates regimes plaguing the Nigerian foreign exchange market for ages.”
ABCON also called on the CBN to investigate the actual causes of the depreciation since July 2nd when it suspended dollar sales to BDCs and why the Deposit Money Banks were unable to bridge the gap of supplying foreign exchange to satisfy the demand earlier fulfilled by BDCs
ABCON said, “Why are the Money Deposit Banks unable to bridge the gap of supplying foreign exchange to satisfy the demand earlier fulfilled by BDCs? Believing that BDCs sold only Personal and Business Travel Allowances which the banks are equally selling now.
“What were the actual causes of the depreciation from cN400 to cN500 per US dollar earlier in the year 2021 if discontinuing sales to BDCs did not stop the trend? OR could the alleged sharp practices of the BDCs be responsible for the continued depreciation of Naira in the parallel foreign exchange market after their suspension?
“If sharp practices of the BDCs were responsible for the poor policy performance of the apex bank, why has the market not responded to the policy since CBN discontinued sales to the sub-sector?”
ABCON also called on BDCs to continue to embrace its automation roadmap which is designed to enhance compliance and global competitiveness, adding that, “This is imperative in view of the success of ABCON in integrating its members to the following: SAAS MASTERS for online real time rendition of returns to CBN, NIBSS; PLATFOR for BVN verification; NFIU PLATFORM for reporting of currency (CTR) and suspicious (STR) Reports, etc.”
What you should know
- Recall that the CBN in July 2021, announced the stoppage to dollar allocation to BDC operators, explaining that they have become a conduit for illegal financial flows working with corrupt people to conduct money laundering in Nigeria.
- Also, the CBN had moved against AbokiFX, a website that provides currency exchange information, saying it will shut down its operations over its posting of exchange rates.
- The CBN Governor, who described the platform as illegal revealed plans to arrest and prosecute the owner of the platform, Olusegun Oniwinde.
- ABCON had in the wake of dollar sales suspension by the apex bank assured members of the public that Bureaux De Change (BDCs) are still providing foreign exchange services