The Central Bank of Nigeria (CBN) is considering limiting the cash payment for buying and selling foreign currencies by Bureau De Change (BDC) operators to a maximum of $500 and ensure payments above the stipulated figure is done digitally.
The apex bank disclosed this in its proposed revised regulatory guidelines for BDC operators in Nigeria published by the bank where it proposed that electronic transfer/purchase of foreign currencies are to be made to BDCs naira account.
It stated,
- “Payments to customers for cash purchases of foreign currency, the equivalent of above USD500, shall be by transfer to the customer’s Naira bank account. If the customer is non- resident (whether Nigerian or not), a BDC shall issue the customer a prepaid NGN card. Where such a card is issued, relevant maximum credit and cumulative limits, in line with relevant Know Your Customer requirements, shall apply.”
- “Payments to customers for cash purchases of foreign currency of the equivalent of USD500 and below may be made in cash.”
Permissible and non-permissible activities if BDCs
According to the bank, permissible activities by BDCs include; acquisition of forex from approved sources, sales of FX in line with its guidelines, serve as cashout points for IMTOs etc.
On the other hand, the apex bank prevented BDC from engaging in street trading, account maintenance, accepting deposits and granting of loans, facilitating international outward transfers, dealing in precious stones and metals, establishing subsidiaries and others.
What you should know
The CBN in recent times have blamed the whopping depreciation of the naira to speculation with the Governor stating the naira is “undervalued” and with time return to its true value.
The apex bank in the past few months have introduced a slew of initiatives aimed at boosting liquidity in the forex market and shoring up the value of the naira.
- The proposed regulation aims to sanitise the operations of BDCs, ensure the apex bank monitors the bulk of forex inflow and outflow and curb illicit flow of foreign currencies in the economy. The regulation although a proposal is subject to review overtime.
- The proposal also aims to curb the perceived “dollarization” of the Nigerian economy where businesses prefer receiving payment for goods and services in Nigeria in USD rather than naira. A behaviour the apex bank has attributed to be responsible for the increase demand for FX in the country.
- The Governor of the CBN had earlier called on Nigerians to moderate their demand for FX stating that FX expended on medical tourism and education in the last decade amounting to $40 billion surpass the current foreign exchange reserve.