Forex Management: Exchange rates of CBN to operators should be uniform – ABCON President

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The President, Association of Bureau De Change Operators of Nigeria, Alhaji Aminu Gwadabe in this interview  with the Publisher/Editor-in-Chief Dr Samuel Ibiyemi speaks on the challenges faced by the sector in 2017 and prospects for 2018. Excerpts:

How will you describe the year 2017?

2017 was a year of mixed feelings because there were many issues especially concerning the foreign exchange accessibility especially around January and February when parents that had children abroad were crying that their children cannot go back to school because they will go to banks, Bureau de Change and they could not access the dollar.

The dollar went to as high as N520.

They were crazy spikes, hoarding, speculations and all kind of vices that really affected the market but  the Central Bank of Nigeria (CBN) was proactive by bringing out measures to address those situations

On collaboration, the first collaboration the CBN did to ensure that the pundits were   put to shame that dollar cannot go below N1000 in 2017 because that was the prediction.

They listened to stakeholders’ suggestions and partnership. In 2017, even the Foreign Reserves was  below $27 billion and so many measures had to come including the ban on 41 items among others.

In fact, allocation turned to almost fractionalization of foreign exchange by the CBN. As an association, we proposed to them that at other climes, this is what is done.

They access their external remittances direct. Why not open these windows like others so that it can be used to inject liquidity, improve the value of the Naira, and to the glory of God, the CBN looked into the proposal?

It’s only in Nigeria that you find inflows of Diaspora remittance being accessed by commercial banks.

In other climes, it is the exclusive preserve of BDCs.

So, CBN directed banks to be selling 50 per cent of their Diaspora remittances to BDCs but there was a lot of abuse, complaints and so the desired result was not achieved.

It therefore reviewed the mandate and said the commercial banks will give it to them while they give it to the BDCs and since then, things have been stable.

Even in terms of buffers which was very low, manufacturers were crying, low productivity was the order of the day.

So, beginning of 2017 was tough.

Along the line, the  CBN in collaboration with bureau de change was able to stabilize the rate from June last year till date.

The foreign reserves increased by about 50 per cent to about $40 billion, oil price increased and Nigeria recorded relative peace in the North East.

It was also a year that started with zero level of investors’ confidence because the investors suspected lack of transparency in the market.

We also suggested that the same incentive the CBN gave to diaspora remittance should also be given so that they will not be taking their inflows to the parallel market because of the high rate which they accepted.

As soon as the CBN discovered the multiplicity in rates , that was when they came up with the Investors and Exporters Window.

In 2017, we had about $7 billion which is almost the same size of our budget.

The stock market also improved despite challenges in the year.

What is the expectation of ABCON fin  2018?

We expect the CBN to deepen our product lines and support our innovative drive.

In terms of deepening, we are already having our traditional lines like PTA, BTA, school fees and medical fees and what we are allowed to do is just $5000 for school fees and there are some school fees that rank up to $20,000.

So, the CBN should ensure that they open up that limit where we can accommodate people’s school fees then also upkeep allowance for the students

You know both the banks and BDCs are only allowed to pay tuition fees. For upkeep, accommodation, parents still go to the parallel market to source those funds.

I believe since the CBN is allowing payments of tuition fees, they should also allow payments for those to the BDCs.

Even the SME window that is now the exclusive preserve of the banks should also be open.

As a proactive organization, we have been engaging the CBN. We want all our transactions to be automated, real-time and online, we are only waiting for the CBN to provide a token that will be used to implement the processing of the transformation.

It has been launched and about 2,500 of our members are already hooked to the platform.

We are also looking at a fair level ground whereby the rates to operators should be a single rate. This is because banks buy at N358 while BDCs buy at N360.

We therefore urge the CBN to close that discrepancy because as I am talking with you, many BDCs are finding it easier to source their dollar from the parallel market which is N358 because that is the buying rate in the market. It is not advantageous for BDcs.

The implication will be that we won’t have to go to CBN. Instead of allowing the parallel market to flourish, let us do something.

If as at now in 2018, we still have disparity among operators, I don’t know when we will realize our objective.

 

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