CBN Forex Ban on BDC Operators: Dollars on the rise, as experts call for increased export activities
By Matthew Denis, Abuja
Barely a month when the Central Bank of Nigeria (CBN) restricted sales of dollars to the Bureaux De Change Operators across the country, findings by Nigerian NewsDirect correspondent revealed that Dollar has continued to be on the rise despite measures put in place to checkmate these excesses by the apex bank.
The CBN Governor Godwin Emefiele weeks ago said “we ended the sales of forex to Bureau De Change (BDC) operators, saying the parallel market has become a conduit for illicit forex flows and graft.”
According to him, the apex bank would also no longer process applications for BDC licences in the country.
“Weekly sales of foreign exchange by the CBN will henceforth go directly to commercial banks,” Emefiele, said in a live TV broadcast after announcing that the bank has retained its benchmark policy rate.
He added that, “We are concerned that BDCs have allowed themselves to be used for graft.”
The CBN Governor stressed that the international bodies, including some embassies and donor agencies, have been complicit in illegal forex transactions that have hindered the flow of foreign exchange into the country.
He said the organisations have chosen to channel forex through the black market than use the official Investors and Exporters (I&E) window, called NAFEX.
Emefiele said the regulator would “deal ruthlessly” with banks allowing illegal forex dealers to use their platforms and report the defaulting international organisations to their regulators.
“We will deal with them ruthlessly and we will report the international bodies,” he said.
Emefiele revealed that banks are mandated to “immediately” and transparently sell forex to customers who present the required documents. All banks are to immediately create dedicated tellers for the same purpose.
“This measure is not punitive on anyone, but it is to ensure the CBN is able to carry out its legitimate mandate of serving all Nigerians,” Emefiele said.
Checks by Nigerian NewsDirect on the Dollar exchange per Naira in the black market change last weekend was N525 against N1, the highest over since the ban.
The hike in foreign exchange is not auguring well the stability of economy, considering the fact that there is high rate of inflation on the commodities with weakened Naira.
Speaking to the National Vice President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Mr. Azubuike Igbokwe, he said “we want to ensure smooth transactions without rancour with the regulator, BDC operators have been cautioned to operate within the fulcrum of the CBN guidelines.”
According to him, they are keying into the new arrangement with the commercial banks and working with relevant Security personnel to curbed bad eggs among operators.
Commercial banks warns customers against illicit activities
Meanwhile, some commercial banks have warned their customers against illegal forex activities. They pointed that defaulters of the new foreign exchange policy may face criminal prosecution by the CBN. Notably among them are GTBank, First Bank of Nigeria Limited, FCMB Group, among others.
The banks in emails to customers said that defaulters of the new foreign exchange policy may face sanctions such as being barred from accessing FX from the official market, restrictions on their bank accounts as may be determined by the CBN as well as criminal prosecution.
In a syndicated email to customers, the banks said, “In line with the CBN’s policy to improve access to foreign exchange for legitimate transactions.
“We are committed to providing you with foreign exchange for your personal and business travel as well as payment for overseas education, medical and other eligible invisible transactions.
“As our valued customer, you have a role to play to ensure the success and integrity of the policy. To enable us to serve you better, you are reminded to note the following rules when applying for FX for Personal and Business Travel.
“FX shall be sold for legitimate travel purposes only. Always have a clear intention and legitimate purpose to travel. You are required to provide a valid Nigerian passport and a valid visa to an international destination.
“Only valid travel documents shall be accepted. Your ticket must be to an international destination outside of West Africa and Cameroon. You are required to provide an international return ticket, with a travel date not more than 14 days from the date of PTA/BTA purchase.”
The banks added that customers could only apply for PTA and BTA once every quarter, and were liable to $4,000 and $5,000 per quarter per applicant respectively
The banks said, “Customers are required to return purchased PTA/BTA to their bank within two (2) weeks from the date of purchase if not utilised for the intended purpose or if for any reason the scheduled trip is cancelled.
“Do not apply on behalf of a third party. FX will only be sold directly to applicants who shall be Nigerians who are 18 years and above and have a valid Bank Verification Number.
“False application and use of fake documents to purchase PTA/BTA is strictly prohibited and is a financial crime punishable under the applicable laws in Nigeria.
“Defaulters of this FX policy may face sanctions that include being barred from accessing FX from the official FX market in the future, restrictions on their bank account(s) for such periods as may be determined by CBN as well as possible criminal prosecution.”
Recall that the CBN had released a total of $200 million to all commercial banks in the country as part of efforts to meet dollar demand for legitimate end users in the country.
When our reporter visited some of the commercial banks within Abuja megacity, most of them have commenced the forex trading among their customers.
A staff at Access Bank around Wuse area who craved anonymity said they started the sale of Dollars seemlessly to customers without hitches.
Also speaking to cross section of customers at GTBank Garki, they said that the forex exchange sales is conducted in a smooth and safe manner inside the banking environment better than the BDC outlets.
When asked whether there’s a disparity of customers by the bank and hoarding of the currency, they noted that there are no any sharp practices yet.
Experts call for increase export activities
Speaking to the Executive Director, the Nigerian Workforce Strategy and Enlightenment Centre (NIWOSEC) and Fellow Chartered Public Administrator, Dr David Ehindero said the practical ways to strengthen the Naira against the Dollar is for the federal government to encourage exportation of goods and services.
According to him, “This can be achieved if the government agencies at the exit ports like the seaports, airport and land borders reduces their tariffs or waivers for exporters.”
Dr. Ehindero emphasized that the apex bank should deliberately introduce programmes and policies that will reduce the country gross demand for dollars which he argued that just like the law of demand the lower the circulation of Dollars in the market circulation will frustrate customers demanding for it.
He noted the government should curb the suspected sharp practices of round-tripping among the operators of our banking system.
Forex should get to the hands of established manufacturers who may need it to import raw materials and machinery for production purposes and ensure that such forex do not end up in the hands of operators of Bureau De Change who sometimes corner the forex from unscrupulous bankers and importers whose offices are their briefcases.
Also speaking on the issue, the former Director General of Lagos Chambers of Commerce and Industry (LCCI), Mr. Yusuf Moda stressed that Dollars would naturally fall when there is an increase in the local products for exports.
