CBN Resumes Dollar Sales To BDCs

The Central Bank of Nigeria (CBN) will
today resume dollar sales to Bureaux
De Change (BDCs) seven months after
it stopped the practice.
It stopped the sales last January
because of what it called dollar scarcity and abuse of operating guidelines.
Speaking to The Nation yesterday,
Aminu Gwadabe, Association of
Bureau De Change Operators of
Nigeria (ABCON) President, said nearly
3,000 BDCs are expected to access dollar from the CBN today.
He said the BDCs had on Wednesday,
funded their accounts with the CBN in
readiness for the transaction, adding
that dollar disbursement will start
today and continue next week. “Our members funded their accounts
with the CBN on Wednesday and will
get the dollar equivalent today. The
funds will be sold at the prevailing
inter-bank rate,” he said.
Gwadabe said the funds would come at one per cent commission, which has
been agreed with the regulator.
The CBN directed the BDCs to render
returns and comply with anti-money
laundering regulations.
Gwadabe promised that the BDCs would abide by the directives and
continually provide detailed reports
on how previous dollars sourced from
the CBN were utilised.
The ABCON boss said the naira
exchange rate against the dollar is expected to crash as more BDCs have
access to the green back. He said the
naira exchanged at N385 to the dollar
at the parallel market, adding that it is
expected to strengthen in the coming
weeks as CBN’s interventions continue to calm the market.
The CBN is targeting huge dollar
supplies from the Diaspora estimated
at $21 billion yearly, but it is expected
to hit $35 billion by the end of this
year as more Nigerians living abroad remit more dollars home after the
adoption of the flexible foreign
exchange policy which removed 16-
month peg on the local currency.
Gwadabe said although BDCs were
happy with the resumption of dollar sales to operators, they are also
requesting that the CBN opens more
windows for them to operate.
“We want more windows to be
opened for BDCs instead of restricting
it to Diaspora funds. We are happy we can now access the Diaspora funds,
but we want the CBN to do more. We
are confident that today’s sales will
continue to calm the market,” he said.
Last January, the CBN stopped funding
of BDCs. Announcing the policy shift in Abuja, CBN Governor, Godwin Emefiele
said: “The bank (CBN) would,
henceforth, discontinue its sales of
foreign exchange to BDCs. Operators
in this segment of the market would
now need to source their foreign exchange from autonomous sources.
They must however note that the CBN
would deploy more resources to
monitoring these sources to ensure
that no operator is in violation of our
anti-money laundering laws”. Last month, the CBN, ifted the ban. In a
circular to authorised dealers titled:
Sales of Foreign Currency Proceeds of
International Money Transfers to
Bureaux De Change Operators and
signed by CBN Acting Director, Trade & Exchange W.D Gotring, the apex bank
said the policy shift would ensure the
stability of the exchange rate and
boost participation of all critical
stakeholders in the foreign exchange
market. Gotring directed all authorised dealers
(mainly banks) who are agents to
approved International Money
Transfer Operators to sell foreign
currency accruing from inward money
remittances to licenced BDCs with immediate effect.
He explained that all International
Money Transfer Operations are
required to remit foreign currency to
the agent banks for disbursement in
naira to the beneficiaries while the foreign currency proceeds shall be
sold to the BDCs.
To ensure the success of the policy,
CBN on Monday, certified only three
international money transfer firms-
Western Union, MoneyGram and Ria. The CBN also stopped hundreds of
global remittance companies from
operating in the country including
WorldRemit, sends more than 40,000
money transfers to Nigeria every
month and receives more than $20 billion in remittances annually from
migrants around the world.
Investigations showed that many of
the affected firms were not licensed to
operate in the country and may have
breached some of the operating guidelines. An industry source alleged
that the affected firms were
withholding dollar inflows meant to
deepen foreign currency liquidity in
the country, and were paying local
beneficiaries with naira instead of dollars.
“The CBN wishes to advise Nigerians at
home and in the Diaspora to beware
of the unwholesome activities of some
unlicensed International Money
Transfer Operators (IMTOs) in Nigeria. This warning has become necessary
because of the activities of some
unregistered IMTOs, whose modes of
operation are detrimental to the
Nigerian economy,” CBN Acting
Director, Corporate Communications, Isaac Okorafor said.
The CBN spokesman said all financial
service providers in Nigeria, just as in
other jurisdictions, are required to be
duly licensed in order to protect both
customers and the financial system as well as to ensure the credibility of
financial transactions.
“For the avoidance of doubt, all
licensed International Money Transfer
Operators, in line with the CBN Circular
on the sale of foreign currency proceeds of July 22, 2016, are
required to remit foreign currency to
their respective agent banks in Nigeria
for disbursement in Naira to the
beneficiaries while the foreign
currency proceeds are to be sold to Bureaux De Change operators, for
onward retail to end users. The CBN
will therefore not condone any
attempt aimed at undermining the
country’s foreign exchange regime,”
Okorafor warned.