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  • BDCs take BVN validation, compliance to new heights

    BDCs take BVN validation, compliance to new heights

    Compliance with the foreign exchange (forex) rules is a task every stakeholder should take seriously. The Association of Bureaux De Change Operators of Nigeria (ABCON), in collaboration with the Nigeria Interbank Settlement System (NIBSS), organised sensitisation programmes for Bureaux De Change (BDCs) on the use and deployment of Bank Verification Number (BVN) validation portal. The events, which were held across the six geo-political zones, are ABCON’s input to the Central Bank of Nigeria’s (CBN’s) policy implementation and confidence-building in BDCs’ operations. It backs ABCON’s goal of ensuring that its members operate within set rules even as it wants the CBN to help reduce rising bank charges depleting operators’ capital and profitability, writes COLLINS NWEZE.

    Bureaux de Change (BDC) operators have one priority-to  comply with rules and regula-tions guiding the foreign exchange (forex) market.

    The BDCs agreed that Bank Verification Number (BVN) remained a veritable tool for fighting fraud in the forex market. Likewise, the Central Bank of Nigeria (CBN) believed that the BVN policy implementation would enhance transparency in forex deals and sustain exchange rate stability.

    The impact has been the swift recovery of the naira from over N520/$1 in February to N361/$1 at the parallel market, a development that has continued to marvel financial pundits. But those, who understood the role played by the BDCs in achieving this milestone were not surprised.

    The Nigeria Interbank Settlement System (NIBSS) powered BVN validation portal, used by BDCs to promote transparency in forex deals, has also been helpful.

    That explained why the Association of Bureaux De Change Operators of Nigeria  (ABCON)  and the NIBSS had in the last two months, organised sensitisation programmes across the six geopolitical zones for over 3,500 BDC operators. The programmes were meant to enlighten BDCs on the usage and deployment of BVN validation portal for industrial benefits.

    ABCON President, Alhaji Aminu Gwadabe, said the world is going digital, and BDCs under his leadership must stay ahead of the competition by deploying time-tested technology to deliver effective services to their numerous customers.

    He said the NIBSS BVN validation portal helps the BDCs to ascertain the genuineness of BVNs of customers wanting to buy forex. The CBN had directed the BDCs to validate the authenticity of BVN, which clients wanting to buy forex submit to them.

    The ABCON boss said the sensitisation programme was part of its confidence-building agenda to ensure that BDCs abide by forex rules. “The programme, which  held in the six geopolitical zones – namely: Kano, Lagos, Awka and Abuja, among others, is our input to CBN’s policy implementation. It is an opportunity to take confidence-building in BDCs’ operations to greater heights. ABCON leadership has zero tolerance for its members that breach operational guidelines,” he said.

    But Gwadabe appealed to the CBN to help BDCs reduce rising bank charges associated with their transactions. “BDCs are charged N1,000 per N1 million transaction and with each operator paying as much as N67,000 for the N67 million monthly transactions. These charges are too high, and I urge the CBN to help reduce the charges, which are becoming huge burden on BDC operators,” he said.

    Findings showed that each of the 3,500 BDCs carry out transactions worth N16.8 million weekly, which comes to N67 million turnover and N67,000 maintenance fee monthly.

    He disclosed that this fee has made it difficult for many BDCs to stay profitable in the business because of the rising operating costs and including overhead. “I appeal to the CBN to address this challenge so that the market will continue to enjoy ongoing stability,” he said.

    The CBN had directed licensed BDCs to ensure that all their transactions have the BVN of the buying customers. The information must be included in the forex returns to the regulator. In the case of corporate customers, the BVN of a director of an authorised signatory of the entity must be provided to the BDC.

    Gwadabe explained that to ensure a hitch-free implementation of the directive, the CBN has continuously provided list of all licensed BDCs to the NIBSS to enable the firm make available the necessary hardware token that would be used by the BDC in accessing the NIBSS portal.

    The NIBSS has subsequently made the portal available on its website to facilitate access for the confirmation/validation of the BVN number of the BDCs’ customers.

    Gwadabe disclosed that all forex-buying customers’ BVNs must be validated by the CBN authorised forex dealer through the NIBSS portal before all transactions are consummated. He said ABCON carried out the sensitisation to ensure that BDCs effectively comply with the directive.

     

    CBN’s Regulation

    The CBN’s rule requires that a token transaction fee of N100 would be paid for each access on the portal. “The NIBSS will also provide the necessary training manual for an “easy to use” operation of the system,” the CBN said.

    The CBN also directed that any BDC that fails to provide the required information in its returns, or provide a wrong BVN would be penalised. First offenders will be required to pay a fine of N1 million while any subsequent violation of requirement may lead to the revocation of the operating license of the BDC.

     

    Benefits to BDCs

    Analysts have said BDCs’ compliance with the NIBSS’s BVN validation mandate is positive for their business and economy. It is expected that more customers, seeing the level of transparency and data integrity in the BDC’s operation, will be motivated to give them more businesses. “Even local and international investors, including Diaspora agencies are more likely to commit their funds to BDCs as the sector becomes more transparent,” Gwadabe said.

    He explained that in many advanced countries, the BDCs are direct agents of International Money Transfer Operators (IMTOs) because of the established transparency and infrastructure in those countries.

    The ABCON leader said the BVN validation portal is one of the infrastructures now available for BDCs to compete favourably and take over the retail-end of the forex market that rightly belongs to them.

    According to him, the platform is also expected to promote financial inclusion, and get more people into the financial services net. “People, who are not connected to the financial system but want forex, will have no option than to open account with commercial banks and obtain their BVNs. It is our own contribution to CBN’s financial inclusion project and determination to take financial services to the grassroots,” Gwadabe said.

     

    BVN validation on NIBSS’ portal

    NIBSS Managing Director Ade Shonubi confirmed that the portal was developed to enable BDCs comply with the CBN’s directive that BDCs customers provide their BVN before buying forex. He also agreed that such exercise brings transparency in the market and prevents multiple supply of forex to single individual.

    The BVN captures customers’ biometric data, such as fingerprints, provides unique identification number for the customers and protects their accounts from unauthorised access, identity theft and fraud.

    The CBN had ordered that customers desiring to purchase forex through all channels must provide their BVN, which shall be validated by the CBN authorised forex dealer through the NIBSS platform before the transactions are consummated.

    The regulator said any authorised forex dealer that fails to provide the required information in its returns or provides a wrong BVN would be penalised; this may include the termination of the forex dealership authorisation.

    Shonubi said NIBSS had deployed two services on the Web and phone that would make BVN verification for BDCs customers and others as easy as possible.

    Explaining the process for the exercise, he said in accessing the phone for the verification, the first step is for customers to dial *565*1#, enter the BVN code type,  date of birth and click on send. While for the Web portal, the customer needs to type: www.nibss-plc.com.ng, a space will show where to enter the BVN code, date of birth and send.

    Shonubi said customers are  charged N10 for phone transaction and N20 for the web portal which the customer would be required to pay either with credit card or internet banking.

     

     

     

     

     

     

  • Naira dips to N367 as dollar scarcity hits BDC

    The value of the naira against the dollar is declining as bureaux de change (BDC) operators say the US currency is getting scarce in the parallel market.

    This is despite several efforts made by the Central Bank of Nigeria (CBN) to stabilise the naira by providing forex to various sections of the market.

    On Tuesday, the naira traded at N366 to a dollar and N367 in some parts of the country as against N365/N364 which it exchanged for on Monday.

    It exchanged for N475 to the British pound as against the previous closing price of N472 and exchanged for N434 to the euro as against N433 on Monday.

    On the international market, the naira traded at N359.43 to a dollar as against N353.99 which it traded at on Monday.

    It traded at N476.78  to the British pound as against 467.08 on Monday and N425.24 to the euro as against N429.80 on Monday.

    A BDC operator who spoke to TheCable said the dollar was getting scarce hence the reason for the increasing price.

    When asked if the central bank had stopped providing dollars as announced, he said the bank had not given the allocation for the week.

    At present, the apex bank provides forex to banks for basic travel allowance, school fees and health allowance needs of customers.

    CBN has also provided different forex rates to be used at the investors’ window.

     

  • BDCs tackle Travelex over cash refund

    BDCs tackle Travelex over cash refund

    Several Bureau De Change (BDC) operators are accusing Travelex Nigeria of delaying cash refund from failed foreign (forex) exchange bids.

    The BDCs insist that refunds from unsuccessful bids, which should come between 24 and 48 hours, take two or more weeks, with the affected BDC operators staying out of business.

    Such practice, financial pundits said, may be hurting efforts by the Central Bank of Nigeria (CBN) to deepen dollar supply and strengthen the naira against the dollar.

    Travelex, a global forex dealer was authorised by the CBN to directly disburse forex to BDC operators who have fully completed documentations and provided adequate funding to Travelex Nigeria for their (BDCs) weekly dollar purchases.

    The CBN had approved $40,000 (N15 million) weekly per BDC to deepen dollar liquidity, sustain operators’ businesses and achieve naira stability. The funds come in two-tranches of $20,000 and can only be accessed by operators with successful bids, and have met full regulatory requirements.

    “When BDCs pay through their banks pay to Travelex and the bids are not successful because of incomplete documentation or any other issue, the funds coming back remain a herculean tax. Many of us just keep waiting endlessly to get the funds back and that is affecting our operations and hurting the expected impact on the economy,” an operator who asked not to be named said.

    Speaking further, the source said that in many occasions, Travelex claimed that the funds have been refunded to the beneficiaries’ accounts, but the refunds were still not received.

    Confirming the development, President, Association of Bureau De Change Operators of Nigeria (ABCON) Aminu Gwadabe, said the delay in refunding such cash remains a serious challenge to many BDCs, especially with many operators not having extra cash to go for fresh bids.

    He said many operators affected by the refund crisis always wait for the cash to come, which normally takes time, and at the detriment of their business.

    He said that Travelex Nigeria has identified the problem, and promised to work with its bank to develop a technology that will enable it identify and refund unsuccessful bid cash immediately.

    But when contacted, General Manager, Travelex Nigeria, Anthony Enwereji, said many of the BDCs do not make their payments through the right channel. He said some operators pay through Automated Teller Machines, some pay through their wives accounts, making reconciliation difficult.

    He said the CBN had investigated some of the BDCs complaints against his company, and found out that Travelex Nigeria was not liable.

    Enwereji said there were three parties to the BDCs transactions- the BDCs’ banks, the Nigeria Interbank Settlement System (NIBSS) and the beneficiary account. He insisted that it was wrong to blame Travelex Nigeria for the problem.

    He said his company was  working on technology-driven reconciliation to ensure that the problems were solved speedily. He said his company had been processing over 1,600 bids from BDCs twice weekly, and had done its best to provide them quality services.

    Travelex is the world’s largest foreign exchange bureau specialized in international payments, bureaux de change and issuing prepaid credit cards for use by travelers. In 2000, it bought Thomas Cook’s worldwide forex business for 440 million Pounds Sterling, which significantly expanded its international operations.

     

  • BDC operators advise CBN on naira

    BDC operators advise CBN on naira

    The Association of Bureaux De Change Operators of Nigeria (ABCON) has advised the Central Bank of Nigeria (CBN) on steps to sustain the naira’s  recovery against dollar. The naira has remained at N362/$1 at the parallel market in the last one week, a major improvement from N520/$1 in February.

    In a statement released yesterday, ABCON President Aminu Gwadade said the CBN should review BDCs dollar buying rate downwards from N360 to N350/$1 and enhance security surveillance at the borders to checkmate illegal cash movement that has dire consequences on naira’s stability.

    Gwadabe said the standard/average trade margin for BDCs across the world is 12 per cent and reviewing the rate to N350/$1 is less than three per cent for Nigerian operators.

    ”The CBN should be proactive enough to quickly review the BDC buying rate so as to bring the foreign exchange transfer rate down and boost market stability. The BDC rate should be brought down to N350/$1 for now and see the positive impact on the local currency,” he said.

    Gwadabe said the rate challenges faced by BDCs, if not checked, would trigger a liquidity crisis that may derail the ongoing recovery of the naira against the dollar. He said the BDCs will continue to support CBN’s determination to achieve exchange rate stability, and strengthen the value of the local currency.

    He said downward review of the BDCs rate is critical at present, as it will keep BDCs afloat to meet increasing forex demand at the retail end of the market. “For now, the parallel market operators are taking over our business because BDCs rates and their selling rates are the same and this has to change,” he said.

    He also called on the CBN to increase the volume of Personal Travel Allowances (PTAs) from $4,000 to $8,000; Business Travel Allowances (BTAs) from $5,000 to $10,000; school fees from $5,000 to $20,000 and medicals from $5,000 to $15,000 quarterly to deepen liquidity in the market.

    Gwadade, said implementing these recommendations will help to stop a new wave of volatility building up in the forex market over parallel market/BDCs rate convergence. Both the parallel market and BDCs rate are trading around N360/$1, and the BDCs buy the International Money Transfer Operators (IMTOs) proceeds from the CBN at N360/$1.

    He disclosed that with forex transfer rate at N375/$1, which is N15 higher than N360/$1 cash rate, rent seekers are mopping up dollars and moving them to Dubai, China and Lebanon from where they transfer them back to the country and make huge margins.

    Gwadabe praised the CBN for liberalizing the forex market and making more dollars available, but regretted that such funds are not really accessible in right volumes to the critical stakeholders like BDCs adding that increasing the volume of PTAs, BTAs, school fess and medicals will help to make more funds available to end users.

    “We are happy that the CBN is liberalising the foreign exchange market to ensure that its objective of deepening the market is achieved. We applaud its decision of allowing authorized dealers in interbank trading to release excess foreign exchange trading positions to other authorised dealers without seeking prior approval from the CBN,” he said.

    Gwadabe also said the coming of Investors and Exporters (I&E) Forex Window, was also part of CBN’s efforts to further develop the Nigerian forex market and improve market structure.

    Part of the liberalization policy, he added, is the directive that all interbank trades, spot, forwards, futures, options and swaps that impact on authorized dealers limit comply with rate reasonability standards. Besides, the CBN reserves the right to intervene as a buyer or seller as it deems fit on the interbank market.

    He reiterated that the forex liberalization policy has created more liquidity in the market, except that such funds are not accessible in the right proportions to key stakeholders.

    “What stops the CBN from raising the PTA and BTA to $8,000 and $10,000 per quarter? The school fees and medicals should also be increased to $20,000 and $15,000 respectively to put more dollars in the hands of end-users. That way, the liquidity that is coming from liberalization of the forex market will be absorbed,” he said.

    The ABCON boss believes that despite the challenges facing the economy, the CBN and BDCs should continue to brainstorm and find sustainable solutions that can help the country wriggle out of the ongoing forex crisis and achieve full economic recovery.

    He also pledged to ensure that purchased funds by its members are disbursed to end users and for eligible transactions only; operators will continue to render weekly returns on dollar purchases to the CBN while those that breach regulatory guidelines are sanctioned.

  • BDCs strengthen compliance to achieve naira stability

    BDCs strengthen compliance to achieve naira stability

    Thousands of Bureaux de Change (BDC) directors last Monday held an emergency meeting in Lagos on naira stability and how to take charge of their operations. The meeting, with the theme: ‘Role of BDCs in Price Stability-Realities and Compliance’, was organised by the Association of Bureaux De Change Operators of Nigeria (ABCON). It was attended by representatives of the Central Bank of Nigeria (CBN), Department of State Service (DSS) and the Police. The directors were advised on the  gains of following sound corporate governance practices in their operations. COLLINS NWEZE writes.

    It was a busy day for over 3,000 directors of Bureaux de Change (BDC) operators, representatives the Central Bank of Nigeria (CBN), Department of State Service (DSS) and the Police last Monday as they showed up for a meeting organised by the Association of Bureaux De Change Operators of Nigeria (ABCON), at the Glover Hall, Lagos. The meeting afforded them the opportunity to decide on how to firm the naira against other world currencies, especially the greenback.
    Aside looking for ways of saving the naira, they took a swipe on the role of forex speculators and agreed to tackle the menace headlong to save the local currency from further depreciation.
    The naira is now exchanging at over N400/$ in the parallel market after improved funding of the BDCs has helped to strengthen the naira to N380/$ in the last few weeks. The naira opened last year at N107/$ in the official market, and today, the official rate is N306.05/$.
    The ABCON President, Alhaji Aminu Gwadabe, in his opening remarks, said the CBN was determined to raise liquidity in the forex market, and urged the BDCs to operate within set guidelines.
    He said: “The CBN has assured us that it will continue to inject more liquidity in the forex market, but the BDC operators must shun speculations and other malpractices. We are expected to comply with the Know Your Customer-KYC directive of the CBN. Stiff sanctions await any operator, who breaches the CBN’s set rules.”

    Gap between Official/Parallel market rates
    Gwadabe sought remedy on how to bridge the rising gap between the official and parallel market rates. “As a Nigerian, anytime I see the gap increasing, I become concerned. These gaps are created by currency speculators’compromise. Speculators are the biggest challenge facing the naira,” he said.
    He said the BDCs are in better position than the conventional banks in fixing rates gaps.
    Highlighting the dangers of speculation, he said any money made through such practices will not help the economy. “Speculation creates inflation, and the funds made through illegal means will also be spent on the problems they have created. Anytime the naira weakens, the economy suffers and there will be job losses and rise in crime rate,” he said.
    Furthermore, he said: “ABCON will continue to update all directors on CBN’s and other regulatory agencies’ forex sale requirements. We have a duty to reverse the negative perception many stakeholders’ have on our operations by complying with regulatory guidelines.”
    Gwadabe disclosed that the BDCs are on the watch list of the International Monetary Fund (IMF), World Bank and United States (US) because of the critical role they play in economies of nations. He cited cases where the BDC operators, had in the past, helped the CBN to strengthen the naira.
    “We saw the naira appreciate from N520/$ in late January to about N380/$ after the CBN resumed sale of forex to BDCs. That was what everyone needed to know that BDCs have major role to play in naira’s stability. We have chosen to support the CBN and be part of the positive story surrounding the naira. We are happy that our contributions are paying off,” he said.
    According to him, the fall in crude oil prices and foreign investors’ exit triggered the drop in dollar inflows and adversely affected naira’s value.

    Exchange rate stability/ pricing
    Speaking further on the exchange rate stability and pricing, he said the BDCs are able to do more business when the exchange rate is stable and relatively close to the official exchange rate, adding that they will do everything within their powers to support the CBN’s drive for exchange rate stability.
    Gwadabe said the BDC directors are the owners of the business and should understand that they carry corporate governance burden, and will directly face sanctions when their operations run contrary to the CBN’s guidelines.
    He said ABCON has a zero tolerance for non-compliance with the regulatory requirement and unethical conduct amongst its members. It also created office of Compliance Officer at its National Secretariat and in all zonal offices to discipline non-compliant operators.
    “We want the BDC directors to fully take charge of their businesses, because they will be punished if anything goes wrong. We also want the public to know that the BDCs are not criminals, but remain critical partner of the CBN in ensuring that price and exchange rate stability are achieved,” he said.
    He praised the CBN for giving each BDC $20,000 weekly and was confident that the apex bank would raise the allocations to $40,000 in the coming weeks, urging the CBN to continue to take steps that would help bring more foreign investors into the economy.
    He disclosed that the CBN was ready to further raise weekly forex sales volume and commission on transactions to the BDCs as operators begin to help in driving down rates. “We are looking at a very acceptable margin between the official and parallel market rates, say a maximum of five per cent,” Gwadabe said.
    On corporate governance, Gwadabe said the CBN and security agencies are all out to ensure that sound corporate governance was followed. He urged the BDC directors to show commitment to good corporate governance practices, and be transparent in rendering their accounts to the CBN.

    Other stakeholders speak
    ABCON Southwest Zonal Chairman, Taiwo Ebenezer, said the BDC operators were willing and ready to get information that would improve their businesses and the economy.
    According to him, the overall interest of BDCs was to improve the status of the naira, because the decline in value of the naira leads to higher inflation.
    Ebenezer, however, urged the CBN to take steps that will ensure that only the BDCs sell Personal Travel Allowances (PTAs) and Business Travel Allowances (BTAs). He said: “If the BTAs, PTAs, and tuition are left in the hands of the BDCs, we will be held responsible for any abuse. But today, the BDCs are not the only players in the market as the banks also operate. It is important to leave this segment of the forex market entirely for BDCs,” he advised.
    One of the BDC operators, Folashade Adebayo, said all operators should unite against the forex speculators. “The speculators are giving us bad name and killing the naira. Let’s unite and chase them out of the market and save the naira,” she said.
    Continuing, she said: “The challenge is how do we ensure that when speculators buy from us, they do not go to the back and sell to parallel market operators? We must devise means to stop them before they stop us.”
    Another BDC operator, Tony Emeka, praised the ABCON leadership under Gwadabe for constructively engaging the CBN and helping to raise weekly allocations from $8,000 to $20,000 even as the volume is expected to hit $40,000 in the coming weeks.
    “It is not a simple task. ABCON has made us proud, and we have confidence in this leadership. We also want ABCON to engage the CBN to review transaction margin. We need more dollar allocations from the CBN to force rates down,” he said.
    Equally, representatives of the CBN, DSS, and Police agreed that there was need for all stakeholders to stop forex speculators from destroying the naira.
    Gwadabe said the ABCON has reported to the CBN the need to increase commission on transactions. “The CBN has been informed on the need to review the margin upwards. The margin is small, and in many climes, it is 10 per cent. We want the CBN to review the margin to N10 per dollar. We have told the CBN that the margin is small,” he said.

    Building strong buffers
    The ABCON boss called on Nigeria to build strong buffers that would protect it in times of crisis. “The United Arab Emirates has over $400 billion in their reserves, and that is a very big buffer for them as it protects their local currency at any given time. The working of the Lebanon economy is highly dependent on the activities of the BDCs and these have shown how important the BDCs are to every economy including Nigeria,” he said.
    Gwadabe, who spoke on the theme: ‘Role of BDCs in Price Stability- Realities and Compliance’, said the BDCs will continue to support the CBN’s exchange rate stability objective and achieve convergence of the official and parallel market rates. “We want the BDC directors to know the gains of price stability, rate harmonisation and regulatory compliance,” he said.
    Speaking on rate convergence, he said the BDCs had in 2006, when the BDC window was first opened, helped the CBN to narrow the gap between official and parallel market rates and are ‘ready to do it again’.

    “We are supportive of need for rate convergence. We want to make the market transparent, accountable and secure for the economy, investors and Nigerians in the Diaspora, to boost dollar inflows and strengthen the local currency,” he said.
    Gwadabe said the government should invest more in infrastructure because investment follows infrastructure. “If there is infrastructure, investors will troop to Nigeria and there will be more dollars. Immediate investment in infrastructure and continued diversification of the economy away from oil will help to improve the state of the naira and the economy,” he said.

  • BDC directors move to close exchange rate gaps

    BDC directors move to close exchange rate gaps

    •CBN sells $768m to manufacturers, airlines 

    Directors of over 3,000 Bureaux De Change (BDCs) will meet today, in Lagos, to agree  on ways to force down dollar rates and narrow the rising gaps between official and parallel market rates.

    The emergency meeting followed last week’s sudden depreciation of the naira against dollar, which the BDCs said was against their business interest and economy. The naira closed last Friday at N395/$ in the parallel market, after stabilizing at N380/$ the previous week. With official rate at N306.15/$, gap between it and parallel market rate widened to N88.85 as at Friday.

    The Central Bank of Nigeria’s (CBN’s) statement  yesterday showed it sold $768 million to airlines, agriculture, petrol and raw material/machineries importers, among others at the marginal rate of N310/$. Details of the transactions showed that the retail and Secondary Market Intervention Sales (SMIS) got $418 million while $350 million went to wholesale auction, Business Travel /Personal Travel Allowances, and school fees. The BDCs bought at N360/$ while short-tenured Forwards of 7-30-day maturity will be sold this week to meet demand of manufacturers and all other forex users.

    President, Association of Bureaux De Change Operators of Nigeria (ABCON) Aminu Gwadabe, said today’s BDC Directors Meeting with the theme: Role of BDCs in Price Stability- Realities and Compliance would be used to warn erring BDC directors on the consequence of violating operating guidelines.

    He said the BDCs would continue to support CBN’s exchange rate stability objective and ensure that official and parallel market rate convergence was achieved.

    “We want BDC Directors to know the gains of price stability, rate harmonisation and regulatory compliance. Operators with infractions will face penalties. We did it in 2006 when the BDC window was first opened. We helped the CBN to narrow the huge gap between official and parallel market rates. We are ready to do it again,” he said.

    Gwadade said the BDCs helped the CBN to narrow the exchange rate gap from N520 to the present rate, and will continue to achieve better results as the CBN continues to fund BDCs with increased dollar allocations.

    “We are ready to partner with the CBN to ensure there is rate convergence. We want to make the market transparent, accountable and secure for the economy, investors and Nigerians in Diaspora so that more dollars will be attracted into the economy to strengthen the local currency,” he said.

    Gwadabe said the BDC directors the owned the business, and should understand they carry corporate governance burden, and will be sanctioned when their operations run contrary to CBN’s guidelines.

    “We want the BDC directors to fully take charge of their businesses, because they will be punished if anything goes wrong. We also want the public to know that BDCs are not criminals, but remain critical partner of the CBN in ensuring that price and exchange rate stability are achieved,” he said.

    The ABCON boss said BDCs’ capital is eroded anytime exchange rates go up, and naira is depreciated.  “We suffer financial losses anytime the naira depreciates. We want a better and harmonised exchange rate,” he said.

    He praised the CBN for giving each BDC $20,000 last week, adding that the funds will help to further strengthen the naira against the dollar. “We expect that the $20,000 given to us will go a long way to douse the tension in the market even as we urge the CBN to continue to boost liquidity in the market,” he said.

  • BDCs get $10,000 more today

    BDCs get $10,000 more today

    The Central Bank of Nigeria (CBN) would release an additional $10,000 intervention fumd to the  Bureau de Change (BDC) segment of the market today.

    CBN’s Acting Director of Corporate Communications, Isaac Okorafor, said in a statement yesterday that the special intervention of $10,000 for BDCs, is meant to meet the upsurge in the forex requests of low-end customers, which have been on the increase in the past few days.

    He said the special intervention does not in any way contradict the Bank’s newly amended sale policy of selling not more than $10,000 only to BDCs once a week, saying the intervention arose due to the increasing demand for forex by Nigerians to address other legitimate needs.

    Okorafor said the apex bank is collating retail requests from authorized dealers upon which sale would be finalised

  • BDCs demand $30,000 weekly allocation, rate harmonisation

    BDCs demand $30,000 weekly allocation, rate harmonisation

    Bureaux De Change (BDC) operators yesterday called on the Central Bank of Nigeria (CBN) to review their $8,000 weekly allocations upwards to $30,000 as dollar liquidity in the economy continues to improve.

    The operators also urged the apex bank to harmonise the rate at which the dollars are sold to BDCs with the rates at which commercial banks purchase their dollars from the regulator.

    President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe who spoke on the operators’ demands, said raising the weekly dollar allocations to BDCs will deepen dollar liquidity and force the rates further down.

    Gwadabe regretted that the CBN is selling dollars to BDCs from the International Money Transfer Operators (IMTOS) proceeds at N381/$ while the regulator sells to commercial banks from the interbank market proceeds at N315/$. He said the banks buy at N315/$ and sell at N375 while the BDCs buy at N381/$ and sell at N399.

    The ABCON boss said by selling at different rates to banks and BDCs, the regulator has placed BDCs at a disadvantage position, saying this could lead to currency speculation.

    Gwadabe urged the CBN to harmonise the BDCs and banks rates to ensure fair pricing and competition as well as create greater confidence in the market.

    He also called on the banks to bring out their dollar reserves and help the CBN deepen the market. “It is supposed to be a two-way quote whereby both the CBN and banks are pumping dollars into the economy to help the local currency. Today, it is only the CBN that is performing the role while the banks continue to warehouse their dollars. I want the banks to also feed the system with dollars so as to help the local currency sustain ongoing rally,” he stated.

    Meanwhile, the naira closed at N450 to dollar lower than N445 traded on Tuesday. The local currency is expected to firm in the days ahead as the impact of $180 million intervention from the Central Bank of Nigeria (CBN) and plans to sell Personal and Business Travel Allowances begin to add up. Naira has been rallying against the dollar in the last one week at the parallel market.

  • ABCON: BDCs not parallel market operators

    ABCON: BDCs not parallel market operators

    The Association of Bureaux De Change Operators of Nigeria (ABCON) yesterday defended Bureaux De Change (BDCs) licensed by the Central Bank of Nigeria (CBN) saying they operate within set rules and are not part of parallel market operators.

    Its President, Aminu Gwadabe, in a statement, distanced ABCON members from the activities of BDC parallel market operators, which he said have constituted major setback to naira’s stability. He insisted that the CBN-licensed BDCs are not parallel market operators as misconstrued by a large section of the public and even top government officials.

    Gwadabe said CBN-licensed BDCs, which are 3,147 operators at present, are key partners of the apex bank in ensuring the stability and competiveness of the naira against world currencies, including the dollar.

    He said licensed operators have been given up to December 31 by the CBN to renew their annual licensing fee of N250,000. He added that they are registered with the Corporate Affairs Commission (CAC)  and with each operator meeting the mandatory N35 million capital base stipulated by the apex bank.

    Gwadabe said Finance Minster, Mrs. Kemi Adeosun severally accused the BDC parallel market operators of contributing to the continuous depreciation of the naira, but insisted the CBN-lisensed BDCs do not fall within the category being described by the minister because they operate based on set guidelines.

    The ABCON chief said the licensed BDCs, not only have their operational offices, they file reports with the Federal Inland Revenue Services (FIRS) and belong to ABCON, which is recognised by the apex bank as the umbrella body for licensed BDCs.

    Gwadabe said his members are committed to naira’s stability at both official and parallel markets, and have consistently partnered with the CBN to achieve this objective.

    “The CBN-licensed BDCs have always played collaborative and positive roles for the regulator in achieving exchange rate stability.

    Besides, CBN’s admission of licensed BDCs into the International Money Transfer Operators- IMTOs-Window foiled analysts forecast for the naira to cross N500 to dollar rate by last December. The licensed BDCs have weekly rate quoted on the Uniform Weekly Exchange Rate for Licensed Bureaux De Change portal.

    He said the rate for this week was N399 to dollar, adding that ABCON has continued to ensure that licensed operators abide by the rate while defaulting members will be sanctioned.

    Gwadabe however, described the BDC parallel market operators or unlicensed BDCs as underground operators, without offices, and which do not render returns to the CBN.

    He said these operators, seen mostly in major streets because they do not have offices, remain the major problem facing the naira.

    “The transactions done by unofficial BDC operators are highly exploitative and lucrative given that they are not bound by any regulation. These set of operators are invisible, and are the ones causing the rising gap between official and parallel market rates,” he said.

    According to Gwadabe, the transactions done by these underground operators are bigger in volume than those of the CBN-licensed operators, and therefore have constituted major roadblock to naira’s stability. He said unlicensed BDCs do not render returns to the CBN, are not registered with the CAC and do not file reports at the FIRS.

  • Banks’ rules stop BDCs from accessing forex

    Banks’ rules stop BDCs from accessing forex

    Banks are introducing stringent rules to ensure that Bureaux De Change (BDCs) do not access the Diaspora funds-related foreign exchange (forex) being canvassed by the Central Bank of Nigeria (CBN), it was learnt yesterday.

    The CBN had granted approval to authorised dealers who are a gents to approved International Money Transfers Operators (IMTSO) to sell foreign currency accruing from inward money remittances to licensed BDCs. The regulator also set the guidelines.

    The banks have however, gone beyond the CBN’s guidelines on accessing the funds, by introducing more  bottlenecks to frustrate BDCs from accessing the funds.

    President, Association of Bureau De Change Operators of Nigeria (ABCON) Aminu Gwadabe said yesterday that banks were asking BDCs to produce evidence of rendering returns on previously purchased forex, evidence of Corporate Affairs Commission (CAC) filings of company secretary, CBN registration certificate and funding of the beneficiary account.

    Gwadabe described the conditions as stringent and high-handed. He urged the CBN to intervene. He said the conditions were part of the banks’ plans to frustrate the BDCs from accessing the funds because the lenders want to disburse the funds to BDCs where they have interests.

    However, the CBN yesterday, issued a new circular to all the banks, asking them to sell dollar to BDCs. In the circular titled:  Re: Sales of Foreign Currency Proceeds of International Money Transfers to Bureaux De Change Operators, CBN Acting Director, Trade and Exchange, W.D. Goting, said  the authorised dealers shall sell foreign exchange cash to BDCs subject to a maximum of $30,000 to a BDC per week.

    He explained that a BDC shall nominate its preferred authorized dealer, a commercial bank, and can only procure the said amount from only that bank of its choice in a week. The CBN warned that any breach of this condition will attract appropriate sanction.

    It said the selling rate by the authorized dealers to BDCs shall be the buying rate from International Money Transfers Operators (IMTSO) plus a margin not exceeding 1.5 per cent;

    “Foreign exchange cash purchased by BDCs from authorized dealers shall be sold to foreign exchange end-users at a rate not exceeding two per cent margin above the buying rate. For the avoidance of doubt, the two per cent margin stated in three above shall applicable to all funds to be retailed by BDCs regardless of sources of fund,” the CBN said.

    According to the apex bank, authhorised dealers shall continue to render weekly returns on sales to BDCs and the BDCs shall also continue to render weekly returns on the purchases from authorized dealers.

    It explained that funds purchased by BDCs shall be disbursed for the Business Travel Allowance/Personal Travel Allowance; overseas school fees; overseas medical fees, with maximum disbursement per transaction not exceeding $5,000.

    “Records shall be maintained for all transactions by the BDCs showing the Bank Verification Number of the end-user, including endorsement of the amount disbursed in the international passport of the beneficiary; International Money Transfer Service Operators shall continue to render weekly returns on their operations with agent banks directly to the CBN as specified,” it said.

    The CBN warned that: “Any authorized dealer and BDC that diverts funds or violates the provision of these guidelines shall attract appropriate sanction including, suspension of dealership licences”.