The Association of Bureau De Change Operators of Nigeria (ABCON) said the foreign exchange policy of the Central Bank of Nigeria (CBN) has caused a huge premium between official and parallel market rates.
This was disclosed by ABCON’s president, Aminu Gwadabe, in a statement seen by Nairametrics.
Gwadabe noted that with the official market rate now at N430/$1 and the parallel market rate at N730/$1, a huge rate gap of N300/$1 exists in the market.
What ABCON is saying
Aminu Gwadabe said, “The foreign exchange policy of the Central Bank of Nigeria (CBN) has adversely impacted the naira stability across all markets and created a huge premium between official and parallel market rates.”
He argued that selling forex earnings at a fixed rate of N430/$1, while the open market rate is N730/$1, was ‘unorthodox’ and lacks ‘credibility and transparency’. He further argued that the “act encourages rent-seeking, currency substitution that continues to hurt real sector operators and the overall economy”.
The ABCON President recalled that when the central bank decided to halt currency sales to Bureau De Change (BDCs) in July 2021, the open market rate was around N501/$1. Since then, the naira to the dollar has declined dramatically, with many Nigerians failing to satisfy their invisible transaction needs even as the regulator has failed to demonstrate much commitment to meeting those needs.
Gwadabe then wondered why small retail exchange institutions (such as the BDCs) have continued to be at the receiving end of the CBN’s exchange rate policy implementations. According to him, it has become imperative for the regulator and the general public to continue to support BDCs’ roles in exchange rate stability.
“I am very confident that Nigeria will in not too distant future appreciate a stable exchange rate and availability of forex in the local economy as the right people for government policies’ implementation get such responsibility,” he stated.
He claimed that the CBN governor, Godwin Emefiele, has attempted to enact numerous policies outside of the traditional money supply that was at odds with the reality of the market.
Gwadabe praised the Naira-4-Dollar program, which offers an N5 bonus for every $1 in remittances from the diaspora as well as an N65 rebate for every dollar in non-oil export proceeds and other incentives, but added that such policies needed a complete makeover with the involvement of all stakeholders.
“I am not a prophet of doom and student of continuing naira depreciation but except fundamental goodwill and courage are demonstrated, the naira will continue to suffer loss in exchange for the greenbacks. The question on the lips of everyone is, are the banks not having the allocation for invisible transactions?” Gwadabe said.
Although some BDCs are fortunate to be operating at international airports and other off-table transactions, he added that the majority of them are out of business because there are little or no alternative sources.
“A licensed BDC in Nigeria cannot access oil proceeds, non-oil proceeds, and Diaspora remittances. We need expansionary regulatory approvals on the scope of transactions and margin reviews,” Gwadabe said.
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