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Tag: BDCs

  • Forex: ABCON seeks rate review for BDCs

    The President of Association of Bureaux De Change Operators of Nigeria (ABCON) Aminu Gwadabe yesterday called on the Central Bank of Nigeria (CBN) to review the exchange rate band at which Bureaux de Change (BDCs) buy dollars to align with commercial banks’ buying rate.

    He spoke to financial journalists in Lagos ahead of the 261st meeting of the CBN-led Monetary Policy Committee (MPC) scheduled to hold on Monday May 21 and Tuesday, May 22 at the CBN headquarters Abuja.

    The ABCON boss said that BDC operators still buy dollars from International Money Transfer Operators (IMTOs) as directed by the CBN at N360/$ and sell at N361.5/$ whereas commercial banks buy at N357/$ and sell at N360/$. He therefore urged the CBN to merge the BDCs and bank rates to achieve market harmony and level playing field for all stakeholders.

    He said the underlying market intrigues and political anxieties in the country are pointers that the CBN needs to listen to ABCON demand and merge both rates in the interest of the naira and economy.

    Gwadabe said leaving the rates as they are presently does not allow healthy competition between both segments of the market.

    He added that the ongoing losses being recorded in the equities market where over N700 billion has been lost in recent weeks, as well as speculative tendencies among big foreign exchange players will continue to constitute big threat for exchange rate stability.

    According to him, the rising naira liquidity, high demand for dollars in the travel seasons, payment for school fees for students studying abroad and rising forex demand at the retail end of the market remain big concerns for exchange rate stability.

    Gwadabe however said that despite the near gloomy picture painted above, all hopes are not lost on the state of the economy, market and CBN’s goal of achieving exchange rate stability.

    He cited the growing fiscal buffers which have seen the foreign exchange reserves hit $47.8 billion and the financial discipline seen in current administration as big plus for the economy and naira’s stability.

    He also said that rising oil prices will continue to arm the CBN with required ammunition to tackle any act that will hurt the system. Oil prices are projected to hit $85 per barrel by July and have remained above $78 per barrel in the last few days.

    Gwadabe said the economic war between America and China make Nigeria a preferred choice for investment by international firms.

    He said the continuous stability at the Investors’ & Exporters’ (I&E) Forex Window and the BDCs subsector will continue to boost investors’ confidence in the economy while improving capacity in the manufacturing sector.

    The ABCON boss explained that although the level of foreign reserves is still significantly below the record high of $64 billion recorded in August 2008, it is nearly double the low of $24 billion recorded in October 2016, increasing by more than $23 billion in a nearly 17 months.

    He also attributed the new foreign reserves level to two sizeable Eurobond launches, a small Diaspora bond issue, the recovery in oil export revenues and the steady bid by the CBN at the I&E Forex window.

  • ‘BDCs should access dollars from I&E Forex Window’

    ‘BDCs should access dollars from I&E Forex Window’

    The establishment of Investors’ & Exporters’ Forex Window by the Central Bank of Nigeria (CBN) in April has stabilised the naira and the economy. The Bureaux de Change (BDCs), which have been supporting the CBN’s development agenda, believe they should be able to access dollars from the window as seen in the International Money Transfer Operators (IMTOs) inflows. Association of Bureau De Change Operators of Nigeria (ABCON) President Aminu Gwadabe says such practice will boost dollar liquidity. He speaks with COLLINS NWEZE on the naira’s outlook in the New Year and the role of BDCs in national development.

    Until the impact of Bureaux de Change (BDCs) operations in national development began to crystalise in the heat of the currency crisis, many thought the operators had nothing to offer. But those with such thoughts have since realised how wrong they were.

    The BDCs have continuously supported the Central Bank of Nigeria (CBN) in its development and currency stability roles, Association of Bureaux De Change of Nigeria (ABCON) President Aminu Gwadabe said.

    He also spoke on the role of BDCs in achieving foreign exchange stability. A  BDC is defined by the CBN manual as a retail forex dealer carrying on the business of Personal Travel Allowance (PTA), Business Travel Allowance (BTA), medical and school fees, and also to carrying on inward and outward transfer.

    Said Gwadabe: “So, a BDC is a licensed outfit, normally by the CBN. All over the world, BDC operators play different roles. For instance, the primary role of BDCs globally is to ensure forex availability to the critical retail sector of the forex market in terms of supply so as to bridge the gap between the official and the parallel market exchange rate. They have even gone, for instance, beyond convergence, beyond providing liquidity, to the achievement of the major policy of the Central Bank of Nigeria (CBN), which is exchange rate stability. Before BDCs were allowed in the official foreign exchange market, the CBN had over the years tried many methods to ensure there is convergence of the exchange rates, but that was not achieved.”

    “ We have witnessed different auction system, Retail Dutch Auction, Wholesale Dutch Auction, all these did not deliver the desired result. But in 2006, when all the prescriptions of how to checkmate this problem of spikes (volability) in the forex market failed, the thought to allow BDCs come into the official market was considered, and they (CBN) allowed us. By then we had a gap of about N50 ranging to N60, but as soon as BDCs came into the official market, within one month, the rates converged to a difference of only 50 kobo between the parallel market and the official market,” he stated.

     

    Role of BDCs

    Gwadabe said that overtime, there have been arguments about the role of BDCs. He disclosed that some people even went to the extent of saying the BDCs are no longer relevant.

    “If you remember the single exchange market that came in 2014, it did not even recognise the role of BDCs. However, that regime did not last because they did not consider the role of the BDCs. But after consistent agitation by the association, that there is need to acknowledge the role of the BDCs and include them, so that we can continue with what we have been helping the CBN  and the economy to achieve, which is exchange rate stability, the CBN reviewed its stance by allowing us to come into the market, and also offered us what they call the International Money Transfer Operations (IMTO) proceeds, and since then there have been significant achievements. One, we have also disappointed the pundits that predicted that the dollar exchange rate will hit N1000 before December 2017,” he said.

    The BDCs, he added, have also helped in eliminating the spike, volatility and uncertainty of the exchange rate.

    “Before people could not plan, manufacturers were crying, but now the manufacturers are opting for the exchange rate above the inflation rate due to the stability being witnessed in the market. No more spike, people can plan, I think for the past six months, we have seen the dollar stable between N360 and N365 even at the parallel market. So this is a great achievement for the manufacturers, for economic planners. At least people can plan, people can order their inventory without much stress.

    “That has been one of the important roles BDCs play, in eliminating the spike, and also the gap between the exchange rates, which created opportunities for rent seeking. There is no more rent seeking. Speculation which also used to be the order of the day in the forex market has also been eliminated. Also currency exportation, which is also an opportunity just because of the opportunities for rent seeking, is also not the order of the day.

    “All these are great achievements that the BDCs have helped in ensuring that the economy is stable, to the point that we have even come out of recession. For an economy to grow, there must be some sectors doing the hard  job. I can assure you that for this convergence that we have seen, the commendation should go to the BDCs, because it is their hard work that made it happen”.

    Now, most of the BDCs  because of the convergence, are not even in operations because the parallel market rate is even lower than that of our rate, so we have brought down the rate. Even below the parallel market rate, with difference of about N1 to N1.50, so there are a lot of achievements.

    Also, in the process BDCs created employment, we are about 3,500 licensed BDCs now and each BDC have at least nothing less than six workers. So if you multiply six by 3,500, we are talking about 21,000 Nigerians that are dependent on the BDC subsector.

     

    Dollar sales to BDCs

    On the need for the CBN to continue selling dollars to BDCs to sustain stability in the market and convergence of exchange rates, he said the sovereignty of any currency is the sovereignty of that nation.

    “No nation will just fold its arm and allow others dictate the exchange rate of its currency. Every nation protects its currency. Now having said that, one of the determining factors of this currency stability is the buffer or  the external reserve.  And I want to congratulate the CBN, the buffers have been good, there is projection of $45 billion reserve by end of next year, so that will continue to generate positive outlook of the exchange rate. And I am happy that the CBN Governor, just last week said that the CBN has the ammunition to fight anybody that will joke with the exchange rate regime. So the sustainability of CBN intervention in ensuring continues growth, continuous stabilisation of the exchange rate is just too important.

    “Now, for  the BDCs, for the past one year, we have not been relying on the CBN sources. Our sources have been diversified from the CBN sources to IMTO sources. So all that the CBN needs to do is to see, in conjunction with the association how we can deepen the market. It is all about deepening the forex market.  We can come in with other products; we can come in with other sources. Even the Investors and Exporters (I&E) window, as far as I am concerned should be another window for the BDCs to be buying money. The CBN, like what they are doing right now, coordinating the IMTO proceeds,  should also begin to coordinate the proceeds of the (I&E) window so that we have enough of liquidity for the BDCs to ensure the stability is maintained”.

    Gwadabe explained that: “Even the Diaspora remittances, you see the association is working on a lot of automation projects to enhance standards, to enhance competition, global competitiveness, in terms of our visibility even for the world to see that there is honesty and transparency in our system. So we are building confidence and we are working with the Nigeria Interbank Settlement System (NIBSS) to ensure that most of our operations, most of our systems are being transparent and very soon our members will start doing online real time rendition of their returns. We have perfected that with the CBN, we are only waiting for the tokens  to be provided.

    “So our members will not need to go to CBN branches to submit their returns, they will now be doing it from the comfort of their office. So it is germane for CBN to continue to deepen the forex market, and statistics, experience has shown that the only reliable and efficient tool to achieving this convergence is the BDC subsector”.

     

    Access to I&E Forex window

    Gwadabe said the CBN should allow BDCs have access to funds from the I&E Forex Window. He said: “It is very workable. If you look at the International Money Transfer Operators (IMTOs) window now, the proceeds come to the banks, which is being coordinated by the CBN, and it is disbursed to BDCs operators. So  the same concept or procedure can be adapted in the I&E window”.

    “It was even our advocacy that made the CBN consider establishing the window as we disclosed the dwindling investors’ confidence in the market. Because we always meet with the investors and they always tell us their concerns and fears, and part of our recommendation to the CBN was to create a special window for investors and exporters.

    “And you can see the impact, it is working very well. In fact, what we are even looking at is that there should be a Diaspora window like the I&E window, the modalities, the technicalities are the same. It is the same institutions that will be involved. The institutions over there that will generate these funds, the banks as correspondent banks, the CBN as regulators and BDCs as the operators. So it is the same players, it’s just coordinating them and making sure the same thing is applied and everybody is happy”.

     

    Agitation for dollar sale margin increase

    Gwadabe explained that right now, the BDCs are operating under the challenges of multiple exchange rates. “That has been a very key issue in terms of  continued transparency and stability of the forex market. However, I am also not unaware of the fact that the sovereignty of the currency is the sovereignty of that nation, so the CBN is having two or three different exchange rates to ensure liquidity,  but you see that has been posing a challenge because you see even the bank rate, the CBN is selling to them at N358 per dollar  and we are buying N360 per dollar from the CBN”.

     

    Tackling multiple exchange rates/ Naira’s outlook

    He said it is possible to tackle multiple exchange rates “It is very possible. When you look at the determination of the exchange rate now, we  have  what we call  managed float. And if you look at even where the exchange rate should go, if not the inflation rate that is higher than the MPC rate, I am sure by now, the prediction of dollar should be N250 per dollar, it would have been feasible.

    “My outlook for the naira, ceteris paribus, I see the naira going to say, N300 to the dollar. The basis for  my outlook is that, one, we are going to have a robust external reserve buffer, two, we are cutting our food import, and we are diversifying our export, and then corporate governance. You see that in all we are doing now, everybody is imbibing the rules of corporate governance, Know Your Customers (KYC), Anti money laundering manual and what have you, to ensure that no more breaches”.

  • ABCON sensitises BDCs on BVN validation

    Association of Bureaux De Change Operators of Nigeria (ABCON) in collaboration with the Nigeria Interbank Settlement System (NIBSS) has carried out a comprehensive sensitisation of Bureaux de Change (BDCs) on usage and deployment of Bank Verification Number (BVN) Validation Portal provided by the NIBBS.

    Speaking on the exercise, ABCON President, Alhaji Aminu Gwadabe, said the BVN validation sensitisation programme was part of the confidence-building agenda of the association to ensure that BDC operators abide by the rules guiding the Nigerian Foreign Exchange (Forex) Market.

    He said the sensitisation programme became exigent given that the world is going digital, and BDCs under his leadership must stay ahead of the pack, deploying time-tested technology to deliver seamless services to their numerous customers.

    According to him, the sensitisation programme was held in the six geopolitical zones  namely: Kano, Lagos, Awka and Abuja, among others. The programme, he added, was attended by over 3,500 registered operators across the country.

    “The ABCON/NIBSS Sensitisation Programme on BVN Validation Portal has been on in the last two months. We are happy that all our six geopolitical zones have been covered. It is our own input to the CBN’s policy implementation and an opportunity to take confidence-building in BDCs’ operations to the next level,” he said.

    Gwadabe added that BDCs are ready and committed to abide by the CBN’s regulations on the forex market. “The CBN directed BDCs to validate the authenticity of BVN that clients wanting to buy forex submit to them. Already, the BVN is becoming very important to government, hence, we are thinking ahead and equipping our members with the right skills and technology. We are committed to ensuring that our members do not fall short of regulatory requirements,” he said.

    He said the BDCs have supported the CBN to achieve exchange rate stability as seen in the naira exchanging at N361/$1 at the weekend, from over N520/$1 last February.

    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.

    The CBN had directed all licensed BDCs to ensure that all transactions they consummate 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.

  • BDCs: CBN’s rate not competitive

    BDCs: CBN’s rate not competitive

    With over 700 of 3,389 Bureaux De Change (BDCs) inactive in the Central Bank of Nigeria’s (CBN’s) forex window over what stakeholders described as unfair pricing regime in favour of the banks, dollar sales at the retail end of the market may be at risk. The BDCs buy dollar from the CBN at N360/$1 and sell to end users at N362/$1 while the regulator sells to commercial banks at N358/$1 and the banks sell to end users at N360/$1. BDC operators are calling on the CBN to review the rate for BDCs to enable them compete favourably with commercial banks, writes COLLINS NWEZE.

    These are not the best of times for bureaux de change (BDCs). The operators have been crying foul over what they described as uncompetitive rate at which they buy dollars from the Central Bank of Nigeria (CBN).

    They insist that the CBN sells to them at N360/$1 and they sell to end users at N362/$1 while the regulator sells to commercial banks at N358/$1 and the banks sell to end users at N360/$1. This rate disparity for two key players in the same forex market, the operators said, is disturbing with the impact already reverberating in the market.

    The Association of Bureaux De Change Operators of Nigeria (ABCON) said more than 700 BDC operators have in recent months been rendered inactive in the CBNForex Window due to the rate crisis. This has put the sustainability of their businesses under serious threat and made it difficult for them to meet their obligations to retail forex users.

    ABCON President, Aminu Gwadabe, said the BDC business has been badly affected by uncompetitive rate as the CBN sells dollars to BDCs at higher rate compared to what the regulator sells to commercial banks, yet both institutions target the same market segment and customers.

    He said if the anomaly is not corrected, it could disrupt the exchange rate stability enjoyed at present.

    For instance, at the official market, the naira opened last week at N305.70/$1 and closed at N305.80/$1 due to daily interventions by the CBN. Similarly, the domestic currency traded flat at the parallel market, closing at N370/$1 all through the week.

    However, at the Nigeria Autonomous Foreign Exchange Market (NAFEX) segment, rate appreciated on all trading days, opening at N360.66/$1 to close at N359.25/$1 which represents a 0.4 per cent appreciation week-on-week.

    Analysts expect rates to hover at current levels this week as the CBN continues its drive to deepen liquidity via Wholesale and Retail markets interventions in various segments.

    Gwadabe said the BDCs supported the CBN to achieve this stability and should be encouraged to stay in business. The CBN’s approved list showed that 3,389 BDC operators have been licensed to carry out the business and are expected to get $40,000 allocations weekly from the CBN Forex Window.

    The apex bank disburses about $135.5 million to the 3,389 registered BDCs on weekly basis to sell to forex end users. The funds are needed for settling demands for Personal Travel Allowances (PTA), Business Travel Allowances (BTA), medical needs and school fees payment abroad.

    Gwadabe described the buying rate for the BDCs as uncompetitive and a big disincentive for many forex users to patronise the operators. He said the banks and the BDCs operate and service the same market segment, and should get dollars at the same rate to enable both institutions compete favourably.

    Gwadabe praised the CBN for liberalising the forex market and making more dollars available, adding that making the funds readily available in right volumes will double the positive impact of the policies on the economy.

    “We are happy that the CBN is liberalising the forex market to ensure that its objective of deepening the market is achieved. 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 liberalisation of the forex market will be absorbed,” he stated.

    The ABCON boss believes that despite the challenges facing the economy, the CBN and BDCs should continue to work together and find lasting solutions that would help the country resolve the ongoing forex crisis and achieve speedy economic recovery.

    He promised that ABCON will continue to ensure that purchased funds by its members are disbursed to end users and for eligible transactions only even as operators that breach CBN’s regulation on the sector will be severely punished.

    According to the ABCON boss, the banks enjoy large customer base with the customers able to carry out their transactions by having their accounts debited to cover the cost of purchase. He said such convenience plus a lower rate put the banks at advantage position to attract more customers than BDCs.

    He lamented that BDCs are not only buying at exorbitant rate, but also sell at a rate higher than that of the banks hence, creating low patronage for the operators.

    Gwadabe advised the CBN to take urgent steps to review the rate at which the dollar is sold to the BDCs as such would boost ongoing recovery of the naira against dollar. The naira has remained at N368/$1 at the parallel market in the last one week, a major improvement from N520/$1 it exchanged last February. He said the success recorded by the CBN in stabilising the naira was largely contributed by the BDCs which remain backbone of the retail forex segment of the economy.

    “The CBN should be proactive enough to quickly review the BDC buying rate to ensure effective competition among all the stakeholders. There is no need to give the banks undue advantage over the BDCs as is currently the case based on the level of disparity seen in the dollar buying rate by both sectors. Nothing stops the CBN from ensuring that both the banks and BDCs buy dollars at same rate,” he emphasised.

    The economy has also enjoyed major inflow of forex in recent months with $7.6 billion recorded in the Investors’ & Exporters’ FX Window – I&E FX Window- launched by the CBN in April.

    The I&E FX window, also called willing-buyer willing-seller window, allows foreign investors to find buyers for their dollars at a mutually-agreed price. The CBN controls about 15 per cent of all the transactions carried out in the window.

    Managing Director, Afrinvest West Africa Limited, Ike Chioke said the jump in foreign inflows is unsurprising given the recent development in the FX market, particularly the launch of the I&E FX window in April.

    “The largest volume of foreign inflows was recorded in May, underlining the positive impact of FX market transparency and flexibility on investor confidence. The knock-on effects of strong portfolio flows are already evident in performance of the domestic equities market which has historically been driven by FPIs,” he said.

    He explained that investors took advantage of the erstwhile attractive valuation of the market, driving the benchmark index year-to-date return to 36.4 per cent as at August 25, from a negative position of -6.2 per cent in the first week of April.

    The Acting Director, Corporate Communications Department at the CBN, Isaac Okorafor, said the success recorded at the I& E FX Window was an indication of the appreciable level of confidence in the foreign exchange management by foreign investors and autonomous suppliers of foreign exchange to the market.

    Nigeria’s currency crisis was triggered by low oil prices which have adversely affected its foreign reserves and created chronic dollar shortages. It was the need to curb these dollar shortages that prompted the CBN to regularly inject dollars into the market to narrow the spread between the official and black market rates.

     

  • BDCs lose ground to banks in forex sales

    BDCs lose ground to banks in forex sales

    More than 700 Bureaux De Change (BDC) operators are inactive in the Central Bank of Nigeria’s (CBN’s) Forex Window as forex end users embrace commercial banks, The Nation has learnt.

    The preference for commercial banks followed the uncompetitive rate regime that shifted the business patronage in favour of the lenders. The practice has cut BDCs’ turnover, putting their businesses under threat.

    Confirming the development at the weekend,  Association of Bureaux De Change Operators of Nigeria (ABCON) President Aminu Gwadabe said the BDC business had been badly affected by the uncompetitive rate as the CBN sells dollars to BDCs at higher rate compared to what the regulator sells to commercial banks, yet both institutions target the same market segment and customers.

    On the CBN’s approved list, 3,389 BDC operators have been licensed and are expected to get $40,000 weekly from the CBN Forex Window. The apex bank disburses about $135.5 million to the 3,389 registered BDCs weekly to sell to forex end users. The funds are for Personal Travel Allowances (PTA), Business Travel Allowances (BTA), medical needs and school fees.

    The BDCs, Gwadabe said, buy dollar from the CBN at N360/$1 and sell to end users at N362/$1 while the regulator sells to commercial banks at N358/$1 and the banks sell to end users at N360/$1.

    Gwadabe described the buying rate for the BDCs as “uncompetitive” and “a big disincentive for many forex users to patronise the operators. He said the banks and the BDCs service the same market segment, they should get dollars at the same rate to enable both institutions compete favourably.

    According to the ABCON boss, the banks enjoy a large customer base with the customers having their accounts debited to cover the cost of purchase. Such convenience plus a lower rate put the banks at an advantage position to attract more customers than BDCs, he said.

    He lamented that BDCs are not only buying at exorbitant rate, but also sell at a rate higher than that of the banks, hence creating low patronage for the operators.

    Gwadabe advised the CBN to review the rate at which the dollar is sold to the BDCs to boost the recovery of the naira against dollar. The naira has remained at N368/$1 at the parallel market in the last one week, a major improvement from N520/$1 it exchanged last February.

    He said the success recorded by the CBN in stabilising the naira was largely contributed by the BDCs, which remain backbone of the retail forex segment of the economy.

    “The CBN should be proactive enough to quickly review the BDC buying rate to ensure effective competition among all the stakeholders. There is no need to give the banks undue advantage over the BDCs as is currently the case based on the level of disparity seen in the dollar buying rate by both sectors. Nothing stops the CBN from ensuring that both the banks and BDCs buy dollars at same rate,” he stressed.

    Gwadabe said the rate challenge 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 stabilise  the exchange rate, and strengthen the value of the local currency.

    Gwadabe 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.

    Gwadabe praised the CBN for liberalising the forex market and making more dollars available, adding that making the funds readily available in right volumes will double the positive impact of the policies on the economy.

  • Forex users dump BDCs as naira/dollar rates converge

    Forex users dump BDCs as naira/dollar rates converge

    These are not the best of times for Bureaux de change (BDCs) operators.

    They have been shunned by foreign exchange users following the convergence of naira/dollar rates at the parallel market  and BDCs for the first time in two years.

    The exchange rate at both parallel market and BDCs closed yesterday at N363/$1. The attractive rate at the parallel market immediately triggered a massive influx of demands from forex users running away from the mandatory regulatory documentations sought by BDCs.

    Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria (ABCON) who confirmed the rates, said BDCs were at a disadvantage, as forex users shunned them for the parallel market where they could buy without documentation.

    “Many forex users prefer to buy at the parallel market instead of BDCs because there are no longer rate gaps. They prefer the parallel market where there is no single documentation required. That is why we are calling on the CBN to review the rate band for BDCs,” he said.

    Gwadabe said the challenges faced by BDCs, if not checked,  would trigger a liquidity crisis that may derail the ongoing recovery of the naira against the dollar. “We want the CBN to review the BDC rate to ensure that currency speculators do not return to the market. Remember the BDCs buy dollar at N360/$1 from the CBN,” he said.

    Gwadabe said the BDCs helped the CBN to checkmate the activities of black market operators and should be supported to remain in business.

    The gap between official and black market rates started to shrink since February 20, when the CBN resumed dollar interventions in key segments of the economy. The feat was achieved after the Central Bank of Nigeria (CBN) pumped over $5 billion in the last four months into the interbank, BDCs, wholesale spot and forwards auction segments of the market.

    Analysts said the introduction of a new foreign exchange window for investors and exporters targeted at increasing forex supply in the market and allowing the timely settlement of transactions helped achieve the current exchange rate.

    “So far, approximately $1 billion has been traded at this window. The spread between the parallel and interbank markets narrowed to N76.15 (May 30th) compared to N83.65 as at April 28th,” Bismarck Rewane, an economist said in an emailed report.

    He said the naira at the parallel market appreciated by 2.63 per cent to close at N380/$ as at May 30th, compared to N390/$ in April. At the interbank market, the naira gained marginally by 0.16 per cent to close at N305.90/$ from N306.85/$ in April. This was mainly driven by the new forex policies and regular intervention in the market by the CBN.

    “We expect the naira to appreciate further in the coming month due to the CBN’s increased dollar sale to BDCs, the intervention for SMEs and favorable forex policy for investors, exporters and end-users. The threat to this is the uncertainty surrounding oil prices. Oil prices fell below $50pb in May before recovering to $52pb. Nonetheless, any further decline in oil prices could deplete the external reserves level, and hinder the CBN’s ability to intervene as frequently as possible,” he said.

    But JPMorgan Chase & Co. and Renaissance Capital have said the naira rally, sparked by increased sales of foreign-exchange forwards and looser capital controls, are contingent on the CBN continuing to sell down its foreign reserves.

    The Nigeria’s gross external reserves decreased by 1.19 per cent ($37 million) to $30.49 billion as at May 25th from $30.86 billion recorded at the end of April.

    The CBN on Monday injected $190 million into the inter-bank market. At the trading, the bank offered  $100 million as wholesale interventions and allocated  $50 million to the Small and Medium Enterprises (SMEs) forex window. Customers requiring forex for Business/Personal Travel Allowances, tuition and medical fees, among others, got $40 million.

    CBN spokesman Isaac Okorafor, said the bank was pleased at the performance of the naira, which had made tremendous gain against the dollar in recent times.

    Okorafor observed that by ensuring transparency in the market as well as fairness to end-users, the CBN had further exposed speculators and checkmated them. He urged all dealers, particularly licensed BDCs, to continue to play by the rule, adding that the CBN would not hesitate to wield the big stick against any erring bank or dealer.

  • Forex: 3,239 BDCs access $520m in four weeks

    Forex: 3,239 BDCs access $520m in four weeks

    The 3,239 bureaux de change (BDCs) approved by the Central Bank of Nigeria (CBN) got $520 million from the apex bank dollar interventions in the last four weeks, The Nation has learnt.

    The funds, followed $40,000 per BDC weekly dollar allocations from the CBN, in its commitment to deepen liquidity in the foreign exchange market.

    A circular from the CBN confirmed the number of BDCs, even as the regulator has reiterated its commitment to continue funding key segments of the forex market.

    The last review of approved BDCs was in January when the CBN approved licences of 3,147 operators and 71 Finance Houses that met its N35 million and N100 million mandatory capital bases.

    The reviewed BDCs’ list was the first since May 29, last year when the apex bank approved 2,998 operators to meet the foreign exchange needs of customers at the retail-end of the market.

    The CBN also approved 71 Finance Houses licences, from previous 65 operators, created to operate at the middle tier of the financial system and cater for the financial needs of the Micro, Small and Medium Enterprises (MSMEs).

    The reforms in the Finance Houses sector have been ongoing for years. The CBN, to sanitise the sub-sector, revoked the licences of 208 finance companies and cancelled the approvals-in-principle of 462 others.

    The reforms, the CBN said, were made to have Finance Houses that were strong. The CBN said it woul continue to sanction Finance Houses that operate without licences.

    The CBN said the new approvals in BDCs and Finance Houses sectors were in line with its plan to deepen the foreign exchange market by getting more operators involved in the retail end of the market.

    Earlier, the CBN refunded almost N100 billion mandatory caution deposits to all the BDCs, after it stopped operators from accessing foreign exchange from official windows.  Each licensed BDC received N35 million from the apex bank.

    Another circular signed by CBN Director, Financial Policy & Regulation, Kelvin Amugo, said the decision was reached, following recent development  in the operations of BDCs in the economy. He added that the regulator will retain the N1 million licensing fee paid by each of the operators.

    The Association of Bureau De Change Operator of Nigeria (ABCON) President, Aminu Gwadabe, said the licensing of new BDCs was a positive development  expected to deepen dollar liquidity.

    He said the CBN reviews the list of operators quarterly, adding that the list has grown from over 1,400 to its current figure.

    “There are more approvals expected. It is a welcome development,” he said.

    According to him, ABCON believes that despite the challenges facing the economy, the CBN and BDCs will continue to work together and find sustainable solutions that can help the country wriggle out of the ongoing forex crisis and achieve full economic recovery.

    “We have continuously assured the CBN and taken appropriate measures to ensure that purchased funds are disbursed to end users and for eligible transactions only. We also render weekly returns on purchases from the banks to Trade and Exchange Department of the apex bank.

    ‘’We also ensure strict compliance with the provisions of the anti-money laundering laws observance of appropriate Know-Your-Customer principles in the handling of forex transactions,” he said.

    The ABCON chief reiterated the need for the public to deal with only CBN-licensed BDCs and for the public to report erring operator for sanction.

  • Liquidity boost to BDCs narrows exchange rate gap, says Gwadabe

    Liquidity boost to BDCs narrows exchange rate gap, says Gwadabe

    Alhaji Aminu Gwadabe,  the President of Association of Bureau De Change Operators of Nigeria (ABCON), says  lower exchange rate gap is due to liquidity boost to the BDCs sector.
    Gwadabe told the News Agency of Nigeria (NAN) on Tuesday in Lagos that the increase in the weekly volume of foreign exchange offered to BDCs  had seen the reduction in the exchange rate gap from N418 to N403 to the dollar.
    “The review of volumes upward of the proceeds of International Money Transfer Services Operators (IMTSOs) and the removal of disparity in applicable exchange rates is impacting the rates positively,’’ Gwadabe said.
    The ABCON chief said that the naira rebounded to an all time low of N360 from N520 to the dollar at the onset of the CBN’s injection of liquidity to the inter-bank market.
    He, however, said that it was surprising that the gains of the injection of over 1.5 billion dollars by the CBN could not last for more than two weeks in spite of liquidity boost to the banking sector.
    “The naira witnessed another somersault to a new high of N420 to the dollar in spite of the liquidity boost to the banking sector,’’ he said.
    Gwadabe said that all these were happening at a time when the banks were returning most of their purchases for invisible from the CBN on the premises of poor customer patronage and resistance.
    The president of the association said that the CBN was left with the only option of using the BDCs to ensure the renewal of confidence in the foreign exchange market.
    He said that the apex bank’s move was also to check the renewed onslaught by speculators, parallel market operators and currency hoarders.

    Gwadabe said the BDCs were collaborating with the CBN and the security agencies to ensure the stability of the naira, adding that the naira might strengthen further during the week.

  • ‘BDCs vindicated by discovery of money in Lagos’

    ALHAJI Aminu Gwadabe, the President, Association of Bureau De Change Operators of Nigeria (ABCON) said that the discovery of huge sums of money in Lagos has vindicated its members. In an interview in Lagos on Friday, Gwadabe said that ABCON was saddened by the development, but added that the real enemies of the Naira were gradually being exposed.

    The Economic and Financial Crimes Commission (EFCC) had on Wednesday discovered about 43 million dollars, N23 million and 27 thousand Pounds sterling from a building at Ikoyi, Lagos. According to him, every well meaning Nigerian has seen that the issue of depreciation of the naira was beyond the BDCs. “Only God knows the quantum of money that is outside the banking sector,’’ he said. He said that it was unaccept- ‘BDCs vindicated by discovery of money in Lagos’ able for an individual or group of individuals to store such volume of money at home.

    Gwadebe said hoarding and currency speculation was no longer profitable, urging members of the public to desist from such acts in the overall interest of the economy. Gwadabe urged the Central Bank of Nigeria (CBN) to critically look into developments in the banks, where unutilised foreign exchange was returned to it in spite of long queues of persons waiting to buy them. “I hear that 100 million dollars was given to the banks recently and only 45 million was used. “The CBN should look into the position of the banks and see how the unused foreign exchange can be earmarked for the BDCs,’’ he said. He expressed optimism that with the spate of investigations and discoveries by security agents, the Naira was on its way to recover.

  • BDCs seek $50,000 weekly, higher margins

    Bureaux de Change (BDCs) directors rose yesterday from its emergency meeting and demanded that the Central Bank of Nigeria (CBN) raise sales  commission on transactions from N2 to N10 per dollar.

    Speaking yesterday, Association of Bureaux De Change Operators of Nigeria (ABCON) President, Aminu Gwadabe, 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.

    He said that exchange rate pressures are coming from black market operators and specularors.

    “There are pressures from black market operators. We are looking at an acceptable margin between the official and black markets maximum of five per cent. Speculators are carried by sentiments. The market is driven by sentiments. We are to assure them that we are ready to boost liquidity in the market. We also want to advice on compliance and other regulatory requirements,” he said.

    Meanwhile, the CBN yesterday said it plans to sell shorter-dated dollar forwards to inject liquidity into the official market and try to support the naira.

    The local currency has weakened on both the official and black markets. The naira fell to N328.50 on the official market but later gained some ground to close at N306.15 after the CBN intervened. However, it slid past N400 on the black market.

    Gwadabe, who spoke on the ‘Role of BDCs in Price Stability: Realities & Compliance’ reiterated the need for zero tolerance for non-compliance with regulatory requirement and unethical conduct amongst its members.

    “Remember that we created the office of Compliance Officer at our National Secretariat and in all its zonal offices and also provided vehicles for the compliance officers to regularly visit BDCs under their jurisdictions,” he said.

    “ABCON under my leadership has continuously assured the CBN and taken appropriate measures to ensure that purchased funds are disbursed to end users and for eligible transactions only,” he added.