The Association of Bureaux De Change Operators of Nigeria (ABCON), has said that the Governor of Central Bank of Nigeria Governor, Mr. Godwin Emefiele should be held responsible for the rise in the number of Bureaux De Change (BDCs) in the country.
CBN had announced its discontinued sales of foreign exchange to BDCs and urged them to seek foreign exchange currencies through autonomous source.
ABCON President, Alhaji Aminu Gwadabe, in a communiqué noted that CBN in its deliberate policy licenced many BDCs instead of few operators in 2014 after increasing the capital base of BDCs to N35 million and caution deposit of N35 million.
According to him, “The governor complained of increase in the number of BDCs and number of applications received per month.
“It is pertinent to note that it was a deliberate policy of the CBN to license as many BDCs as possible. For example, in 2014, when the CBN increased the capital base of BDCs to N35 million and caution deposit of N35 million, there was a drastic reduction in the number of BDCs, as out of the 2,500 BDCs in existence then, only 1,800 BDCs were able to meet the new capital requirement.
“The CBN at this point should have suspended or stopped granting new licenses. The management of the CBN for reasons best known to them however chose to continue to issue licenses to new BDCs. The question is, why complain about proliferation of BDCs when you are the one granting the licence?
“There was a time when the CBN suspended issuance of banking licence, why not do the same in the case of BDCs. Governor Emefiele should stop complaining about a problem he created,” he said.
The ABCON President noted that despite the banning of 41 items from the nation’s foreign exchange market, the CBN has not been able to meet demand for legitimate items even in the official foreign exchange market.
He disclosed that CBN inability to meet demand for foreign exchange legitimate items usage is responsible for fuelling demand at the parallel market and depreciation of the naira in the market.
In his words, “This is the reality, Governor Emefiele did not want to acknowledge to the world. This is a reality that cannot be solved or wished away by stopping dollar sales to BDCs because as indicated above what the CBN sells to BDCs is less than 10 percent of what it sells to banks. Hence the decision to stop dollar sales to BDCs would only worsen the situation.”
He explained that since Nigeria is import dependant country, there would always be demand for foreign exchange for genuine business transactions as against for speculation and portfolio investors.
He said, “The policies so far introduced have created huge volumes of unsatisfied demand for foreign exchange for legitimate transactions, which have succeeded in enhancing patronage of parallel market and continued depreciation of the naira. The approach so far employed has only succeeded in aggravating the demand and supply dynamics of the foreign exchange market, and enhancing patronage of parallel market activities.”
He added that the decision of the CBN to stop dollar sales to BDCs has grave implications for the economy.
“First is the spike in the parallel market exchange rate from N270 to over N290 per dollar within three days of its pronouncement. Over time this would lead to increased scarcity of dollars even for legitimate activities and further depreciation of the naira.
“Given the import dependency of the country and the inability of importers to access dollars in the official market, the increased exchange rate would aggravate the inflationary pressure in the economy, as prices of goods and services rise in response to the continued depreciation of the naira. For the BDC subsector, the decision might lead to mass retrenchment as some BDCs find it difficult to generate enough revenue to meet their running cost.
“In addition, the depreciation of the naira in the last two years translates to 50 per cent lose in the value of the N35 million the CBN collected from each BDC as caution deposit.”