The Central Bank of Nigeria (CBN) said the ban of sale of foreign exchange to the Bureau de Change (BDC) operator was necessary because most of them have become conduit for illicit forex flows and graft.
CBN Governor, Godwin Emefiele, while announcing the ban said CBN would also not issue new licences for operation of BDCs.
“We are concerned that BDCs have allowed themselves to be used for graft. They have turned themselves away from their objectives,” he said.
After the announcement, the apex bank directed commercial banks to immediately set up teller points in designated branches for the sale of forex.
It advised commercial banks to ensure that no customer was turned back or refused forex, provided that documentation and all other requirements were satisfied.
This new forex policy has drawn divergent reactions from stakeholders on its implication and effect on the economy and Nigerians.
The CBN will, thus, be selling directly to commercial banks, from where customers who have legitimate and applicable transactions will be able to buy.
The entry of BDCs into the Nigerian financial system in 1989 was to broaden the foreign exchange market and improve access to foreign currencies, due to challenges encountered by commercial banks in offering such services.
After Emefiele’s announcement on Tuesday, the Naira responded with a decline against the dollar at both the official and black markets.
The currency closed at N505 to one dollar, recording 0.20 per cent devaluation from N504 it traded on Monday. At the official Nafex window, it closed at N411.67, from N411.50 the previous day.
Some Nigerians expressed worry that the CBN move may further devalue the local currency, but experts opined that the policy was necessary to curtail the illegal activities at the BDCs.
A check at commercial banks like Keystone Bank, Fidelity Bank and Zenith Bank, all in Abuja, showed that they have all complied with CBN directive to set up dedicated teller points for the sale of forex.
The banks were selling dollars at an official rate of N412, with a maximum of 4,000 dollars for personal travels and 5,000 dollars for business travels.
An Economist, Mr Tope Fasua, commended the CBN for the decision to restrict forex sale to commercial banks only.
Fasua, the Chief Executive Officer of Global Analytics Consulting Ltd. said though the measure was a shock to the system, it was a necessary step to sanitise the forex market.
According to him, the purpose of BDCs had been defeated with most of them falling short of their mandates.
“The CBN has done the right thing, even though it is a shock to the system. We have about 7,000 BDCs in Nigeria, which is a world record in itself.
“All of them are meant to sell forex to travellers, but they do not do that,” he said.
A past President of the Chattered Institute of Bankers of Nigeria (CIBN), Mr Okechukwu Unegbu, advised the apex bank to reconsider what he described as “blanket ban” on BDCs.
Unegbu said that the ban would create some challenges in the market as commercial banks might not be able to meet the forex demands of importers.
“Not all the BDCs are bad, but as it is now CBN has banned both the good and the bad.
“This punitive measure by the CBN can negatively affect the forex trading market. Most businessmen, when they cannot access forex from commercial banks, rush to the BDCs.
“Banks are not perfect, they also bend the rule sometimes, but that of the BDCs became so obvious due to their large numbers,” he said.
Aminu Gwadabe, President of the Association of Bureau De Change Operators of Nigeria (ABCON) said that the association would engage the CBN in order to resolve all the issues that led to the ban.
“BDCs are licensed to provide retail FX services, including buying from the public and also selling to end-users for allowable transactions namely PTA, BTA, payment of medical and school fees,” he explained.
He said that, while the CBN had stopped dollar sale to BDCs, it has not cancelled their operating licences, or banned them from providing forex services to members of the public.
He called on ABCON members to see the CBN pronouncement as a wakeup call and an opportunity to widen their customer base and deepen their business.
In the midst of the controversy, however, Nigerians are concerned about policies that can impact positively on the economy by strengthening the Naira, reducing inflation and generating employment.
Many are, therefore, waiting to see how this new policy would positively impact the nation’s economy and their personal incomes and earnings.