In a bid to enhance the efficiency of the Nigerian Foreign Exchange Market, the Central Bank of Nigeria (CBN) has unveiled a series of operational changes for the Bureau De Change (BDC) segment.
The announcement, made on August 17, 2023, outlines key measures aimed at streamlining and improving the BDC operations.
Under the new framework, the spread on buying and selling by BDC operators is set to fall within a permissible range of -2.5% to +2.5% of the Nigerian Foreign Exchange market window’s weighted average rate from the previous day.
This move is expected to provide more stability and transparency to exchange rate fluctuations, ultimately benefiting both BDC operators and the general public.
Another significant alteration is the mandatory submission of periodic financial reports by BDC operators.
These reports, including daily, weekly, monthly, quarterly, and yearly renditions, are to be submitted through the upgraded Financial Institution Forex Rendition System (FIFX), tailored to meet the specific requirements of each operator.
This change aims to enhance oversight and ensure that the BDC sector operates with greater accountability.
The circular further emphasizes that failure to submit accurate returns within the specified timeframe will result in sanctions, potentially leading to the withdrawal of operating licenses.
Even in cases where BDC operators have had no transactions during a given period, they are required to submit nil returns, thereby fostering a culture of compliance and thorough record-keeping.
All BDC operators and the public are urged to familiarize themselves with these new guidelines and adhere to them meticulously.
By implementing these measures, the Central Bank of Nigeria anticipates a more robust and well-regulated BDC segment that aligns with broader efforts to enhance Nigeria’s foreign exchange market efficiency.
What this means
In a significant shift, this move marks the re-entry of BDCs into the country’s foreign exchange market.
This move marks a departure from previous policies, including those enacted under the tenure of former CBN Governor Godwin Emefiele, which had temporarily excluded BDC operators from participating in the market.
The new policy signifies a concerted effort by the central bank to reengage BDC operators and reintegrate them into the foreign exchange landscape.
Nothing new as far as I’m concerned. This just recycling the old rules.
Don’t be confused CBN, the Naira is being dragged along by the USD to any direction the Dollar goes as a per and the black market is telling us the true exchange rate. You can’t influence the value.
Why did you think they can’t do anything to stabilise the naira brother they can do more than you think if CBN give out some terms now like give out there rate the dollar will depreciate rapidly its because everything is black market now and price will flucte base on demand and supply….more demand and less supply will make price rocket less demand high supply will make it drop so CBN need to intervene to make changes if not we will see naira sharply to 1,500/1$
And you think CBN or Nigeria have enough dollars to intervene enough as to increase supply to the extent of making naira stop its downward slide? Any intervention is temporary cause we don’t have enough.
The solution is for us to invest in setting up export oriented companies and improve our fx inflows.
So the CBN should fold their hand before your solution cone on board
Creating export economy is the responsibility of both the citizens and the government. In a situation where majority if the well todo individual in the society is either they keep their money in bank, buy stocks and equities or involve in importing finished goods from foreign countries in Nigeria. We should all cone together to create value driven economy that is based on manufacturing goods need to propel the economy into export base. I rest my comments.
This a good development but will not achieve much without increase in domestic production. This will moderate the high demand for import which will lead to less demand for fx and reduce pressure on exchange rate.
Let the refinaries work and CBN provide funds for SME, you see how fast naira will stabilise.
CBN and FG need to harmonise both monetary and fiscal policy to achieve a better economy for the country.
Recently a loan was secured to stabilise the naira. They also need policies to make it effective if properly adhere to. Controlling the spread will go a long way cos it implies that as a BDC operator. You can’t sell more that 2.5% compared to the CBN rate and you are not expected to buy above the same quoted spread. CBN just need to pump more dollar into the circulation so as to increase supply.
Is CBN going to resume sales of dollars to the BDCs Where is the dollar going to come from?
They probably think that 3b is big enough to do the magic. This is I’ll planning. Azuka
Kudos to the new management of CBN for this move. This is what we have been clamouring. Let the new Nigeria Foreign Exchange Market be launched so that BDCs would buy dollars from either or both from IMTOs or Commercial banks for resale to end users at a margin of 2.5%
It seems like you’re new person in this country
This is a good development provided the BDC will be made to be transparent in their operations. The black market must be outlawed if FX will work well. In civilised countries, the Banks and BDC are the only authorised FX operators. If black market is not outlawed and well enforced, BDC, Bank managers and sellers will still be carrying their dollars to the black market in order to get higher rates. At the end of the day, inability to get dollars in those two official outlets will still make the cost of dollars to artificially goes up. It will take boldness to do because the black market is being controlled only by a section of this country and it is a no go areaa for other tribes.
This is a good move, if it will lead to availability of FX.. Nigerians are going through a lot.
CBN is setting them up for more transparency, accountability and expensive regulation in case anyone wants to rig the system. I suspect that the CBN will eventually bring BDC back after putting measures in place like price verification portal for importers and exporters, the forex price verification system and stringent controls have been put in place. Now they are glorified forex tellers and no longer profitable like before unless they want to end up in jail.
The problems are so simple, in as long as cbn will not punish defaulters to show as examples to the rest some BDC would find ways to break rules and get away with it. Nigeria is a place where organisations and individuals break rules and rob each other palms and this end the story. No punishment for impunity, and no effecient and effective regulatory authorities.
It’s going to be a good move if and only if there is going to be a sustainable flow of forex to meet the demands.
Laws are useless when they are not inforceable.
In a country where there are no consiquencies for crimes, the laws are useless.
Then on the reintroduction of the BDC, for me there is no change. Can anyone tell me the last time the banks sold a dollar to them, the black market will remain the driver of the market because that is the only available option for the greater majority, so it is a matter of demand and supply. As far as the dollar remains scares in the banks and with the BDCs, the only available ones in the black market will be under pressure causing the rise in rate.
Is it not sad that Nigerian banks are unable to efficiently serve the public in this regard? It shows the greed and rot in there. . The banks consume and round-trip all the forex made available to them, making BDC’s indispensable. . . What a shame
I agree with you. But what we see playing out at the banks is a mere reflection of the rot in the larger society, where high profile persons and organisations rarely pay for their offences. Like several others have commented here, rules are useless without enforcement and punishment for defaulters.
Supply and demand in the fx market..has proven that our economy is in bad shape.in my own opinion the only way out is to encourage more exportation.
We’re used to unfair deals by our institutions and policy implementaters. Can anyone explain to me why the black (parallel) market is yet to be outlawed? If the bankers and politicians finds the black market, which is the complimentary part of round-tripping short-circuited, wouldn’t that be a cheaper way of curbing this rot?
The BDC have little to play in all this, the way our country is modelled the naira can only go south. We are not earning USD as we speak, NNPC don’t earn a penny, our biggest asset which is the refineries are not working. We have no power to boost production of whatever we lay our hands, we are not exporting, bottlenecks in our ports, we have borrowed our kids future. It will take so much brain and sincerity to dig us out of this hole. The BDC will crumble on their own once we start earning enough USD or maybe sign a trade agreement with China and India to settle in their own currency.
In order to stabilize the naira, let CBN regulate the foreign exchange transactions. CBN should put in place official rate for exchange of foreign currencies. Then for the economy of a country to be better and be in good shape, export of finished goods should be far more than the usual import of goods as being practiced in Nigeria.. Floating of forex is not the solution. If the FG borrow dollars , the bankers will still sell it to black marketers.
What a confused country with deficient administrative mechanism. They go front today, and reverse tomorrow.
Its unfortunate that commercial banks used the FX for their personal gains, after collecting customer’s documents for travel purposes at the last day that one is about to travel they’ll tell you sorry,no Dollars and use your means of identification to render reports to CBN.Other means of competition for the FX is the best.CBN sell’s to BDC,s at a pre determined price and most times if the price is not favorable BDc’s abandon the forex to CBN and source in the best markets
Before Emefiele brought banks on board. BDCs was doing well with the forex market. The educated criminals in the banks are doing us in.
CBN should take the BDC in fully as it was before and sell the usual $10,000 weekly to them. Then use the opportunity of giving them the weekly 10k to regulate all their buying and selling activities.
CBN can only do monetary policies. The finance ministry and executive should take further action as it relates to fiscal policies. Monetary is immediate, fiscal is long term.