Bureau De Change Operators in Nigeria have agreed with the acting CBN Governor that most transfers conducted by the International Money Transfer Operators (IMTOs) have been diverted and are not being tracked.
The acting CBN Governor, Folashodun Shonubi, had earlier in August attributed the crash of the naira against the dollar and its inability to manage the foreign exchange market to the diversion of diaspora remittances to the unofficial markets including the parallel.
This coincided with the time the naira at the parallel market hit a record low of N955/$1, although it has now dropped to N860/$1 as demand pressure and forex scarcity worsened.
Shonubi explained that many diaspora remittances came to Nigeria in dollars and were not documented officially, as they end up in the parallel market.
Diaspora remittances diverted to unlicensed online firms
The President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, revealed that most of these funds are diverted to unofficial markets including some unlicensed online firms.
- While acknowledging that most of the diaspora remittances are being diverted even outside the parallel market Gwadebe said, ‘’We had a meeting with the banks where we even tried to bring up the issue of diaspora remittances so that we can harness it and bring liquidity, but they said they don’t see it. That’s the truth of the matter, a lot of unlicensed online firms are in the process.
- ‘’It’s not in the official market, it’s not even in Nigeria, it’s not even coming, that is the truth of the matter, It’s being left abroad to be financing the 41 banned items and other illegal speculation holding activities. People are sending money but the thing is that it is not coming through a regulated and official channel.’’
Acknowledges malpractices by some BDC operators
On the accusation that BDCs are part of the parallel market and involved in illegal activities, the ABCON President said,
- ‘’There are different categorizations of BDCs. Yes, I know that there are some BDCs that receive diaspora remittances and are not reporting officially. Today we had a sensitization and I think that is what the CBN is trying to do. Any Bureau De Change that is doing transactions and refused to send the returns of its activities is going to be summarily dealt with.
- ‘’The CBN has changed the format on how you will send your returns, adding some other features to those returns we had been sending before. They have realized that some licensed BDCs are operating yet they will say they are not operating hiding the fact that there are no interventions by the CBN, they are saying no transactions and sending nil returns to Central Bank.
- ‘’Central bank has discovered that and they have done sensitization exercise where they have introduced other information that will be needed from every BDC.’’
Some fintechs diverting diaspora remittances
On the accusation that these diaspora remittances are diverted to fintechs and some other channels other than the official forex window and even the parallel market, Gwadebe said,
- ‘’Yes, to some other channels that operate under different jurisdictions all over and lack standardized regulations. Can you tell me about Binance that is not in Nigeria, Nigerians are not doing transactions of Binance. These are borderless platforms, they don’t have borders, they don’t have offices, you don’t even know where they are, are they operating in Kenya, South Africa, Nigeria or Ghana.
- ‘’They just don’t transfer money through an agent, there are a lot of online platforms that is being advertised in all these places where we have Nigerians and they are highly speculative, sometimes their rates is even higher than what is obtainable in the parallel market.’’
He said that there are a lot of fintech companies to which these remittances are being diverted, noting that they buy it at very high rates.
What the Federal Government needs to do
On suggestions on what the government should do, the ABCON President said, ‘’I suggest stiffer measures for such market players, there should be enabling environment for the licensed players, don’t limit the BDC business model only to traditional cash model, allow them to evolve, give them the enabling environment, create competition, create transparency, so that way we will deepen the market.
- ‘’There are many online fintechs, they are not even regulated and they don’t need to go to CBN and say I want to do online business, but you as a BDC they are restrictions, you can’t do it. Even if you want to do it, you have to go under.’’
CBN bows to pressure
The CBN in a major policy shift gave in to pressure from BDC operators as they unveiled a series of operational changes for the Bureau De Change segment in a bid to enhance the efficiency and transparency of the Nigerian Foreign Exchange Market.
Under the new framework which reintroduced the BDCs in the market, 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.
Another significant alteration is the mandatory submission of periodic financial reports by BDC operators.
Must you based the country Forex on the diaspora remittances? The same diaspora that has no say in the Nigeria politics. Only you sell crude oil and prefer to import bensin, only you prefer illegal sales of crude oil and prefer to say crude oil theft. Only you preside over criminal enterprise of federal government agencies imposing all manner of charges against the people. The so called unregistered money transfer give the best rates for the Naira final beneficiaries and at no cost of transfer. The CBN can on their own set up a remittance portal to provide maximum rate to get their hands on the dollar and then print the Naira to settle the accounts of the receivers. Diaspora Africans are rational beings and want also the best for their hard earned money. The same so called unregistered in Nigeria limited firms are the ones actually bringing the remittances to Nigeria and settling businesses that are exposed to the Nigeria environment. That goes a long way to reducing the various demands for Forex by companies in Nigeria looking to repatriate funds . For more than 20 years people were being exploited by the dominant player in the industry, but today that has changed due to the Fintech startup companies that explore different ways to achieving a better result for the end users. Again, the government should not reduce themselves to diaspora remittances as a solution to their Forex challenge. If you are pegging, you should be able to provide the liquidity on demand. If you are on state guided price fixing, that has no impact on businesses conducted outside Nigeria.
Promote non oil exports.by reducing the export cycle time. Businesses should improve their brands and packaging. Beneficiaries of forex for businesses and export must provide evidences of remittances through the official window. Otherwise, they should be denied access to official dollars.
You just hit the nail on the head. The stone agers have not realized that the World has moved and left them behind.
They think that they Will be fooling people every year