By Kayode Tokede
Bureaux De Change Operators under the aegis of Association of Bureaux De Change Operators of Nigeria (ABCON), has kicked over the Central Bank of Nigeria’s (CBN) threat to review their licence if they failed to access its foreign exchange window at least three times weekly.
The Acting Director, Corporate Communications, CBN, Mr. Isaac Okoroafor in a signed circular on Sunday said, “All BDCs shall henceforth access forex from the CBN on Mondays, Wednesdays and Fridays. It is compulsory that all BDCs access forex at least three times weekly. Any BDC that fails to access the forex window at least three times weekly shall have its licence reviewed by the CBN.”
Responding, the President, ABCON, Alhaji Aminu Gwadabe in a statement said the association rejected CBN’s directive mandating operators to make three foreign exchange biddings and purchases on weekly basis.
The operators also insisted that the regulator’s review of BDC’s dollar purchase rate should align with the commercial banks’ buying rate.
According to him, “CBN’s directive mandating BDCs to make such purchases is not in line with global best practices and should be put on hold. He said: “The CBN’s directive at this time of our operational difficulties is no doubt precarious and vague and was intended to emasculate a sector that has helped the system to stabilize and thus unacceptable”.
Gwadabe said the regulator should first merge BDC dollar buying rate with that of commercial banks and also pay ABCON disbursement fees as it is practised globally. For instance, he said Travelex also collects forex disbursement fees from the CBN.
The ABCON leader urged BDC operators to remain calm and focused, ahead of executive engagements with the CBN and further communication soon.
Gwadabe therefore recommended that the CBN cuts the three market days for buying dollars to two at $30,000 per market day. He said: “The rate between the banks and BDCs should be merged for uniformity and fairness. A situation where the banks buy dollar from the CBN at lower rate than the BDCs is not helping the market stability drive. Besides, ABCON should be considered for disbursement fees like Travelex in the collection centres to ameliorate the new assignments”.
Operators insist that making Fridays as market days and funding same day will be difficult to achieve and therefore should be discouraged.
Gwadabe assured the CBN of ABCON and BDC’s continuous support in enabling the regulator achieve its core mandate of ensuring exchange rate stability and liquidity access.
Gwadabe also added that, “The BDC sector is confronted with many challenges such as multiple exchange rates, abnormal bank charges, Value Added Tax (VAT) and Commission on Turnover (COT), parallel market operators and illegal International Money Transfer Operators (IMTOs), porous international borders, complex documentation requirements and poor capacity/ skills of operators”.
Continuing, he said, “For instance, the increasing difficulties arising from over regulation and complex documentation requirements that licensed BDC operators are facing in carrying out their daily legitimate operation remain worrisome. These hitches have negative impact on BDCs’ efforts toward compliance with statutory and regulatory requirements. For instance, six units within the CBN are involved in BDC regulations, supervision, licensing, monitoring, saying this constitutes multiple regulation of a unit of the financial sub-sector that is only involved as a small market player”.
He said a BDC operator is expected to render daily, monthly, quarterly, half yearly and annual returns to these various departments of the same corporate body, which could be very cumbersome, repetitive and time consuming for both the operator and the regulator.
“ABCON is therefore using this opportunity to appeal to the CBN to take urgent steps to review the rate at which the dollar is sold to BDCs in order to boost ongoing recovery of the naira against the dollar. Obviously, the BDC business has been badly affected by “uncompetitive rate as the CBN sells dollars to BDCs at higher rate compared to what it sells to commercial banks, yet both institutions target the same market segment and customers.
“The BDCs buy dollar from the International Money Transfer Operators (IMTOs) at N360/$1 and sell to end users at N361.5/$1 while the CBN sells to commercial banks at N357/$1 and the banks sell to end users at N360/$1,” he said. He urged the CBN to review BDC rate to align with that of the banks since both sectors serve the same customers.
The ABCON boss also wants the apex bank to make BDC transactions Value Added Tax (VAT) and Commission on Turnover (COT) exempted and reduce BDCs licence renewal payments.