Thursday, January 14, 2016

CBN policy banning sale of forex to BDCs

I write to commend the Monday, January 11, 2016 CBN decision to stop the sale of foreign exchange to the Bureau De Change operators and the lifting of ban on bank customers who hitherto had been barred from depositing foreign currencies in their domiciliary accounts. I am of the opinion that these steps have been long overdue. I think CBN ought to have stopped the sales of FOREX to BDCs long ago given the fact that it was not an international best practice, in fact Nigeria is the only country where such is done worldwide. Second, the BDC in spite of the CBN noble intention had refused to support the stabilisation of the Naira. Rather, they are blinded by their own personal ambition for super profit.

Imagine a situation where they buy Dollars at about N197 per dollar only and  sell same to ordinary Nigerians  at N250 per dollar or more. No wonder, as CBN governor, Godwin Emefiele observed that there was an exponential increase in the number of those seeking to obtain BDC operating licence with close to 150 fresh requests every month. Today the number of operators has risen from a mere 74 in 2005 to 2,786 as at January 2016. This is despite the CBN policy in 2014 that the BDCs should recapitalise from N10 million to N35 million and in addition make a mandatory caution deposit of N35 million, also from initial N10 million. This ought to have shown CBN long ago that the BDCs are playing games with the FOREX purchased from the apex bank, more so as Naira continued a free fall in spite of the initial devaluation. Information has it that Nigeria foreign reserve had lost about $3.8 billion since mid-last year when CBN announced a recovery to $31.8 billion.

On the lifting of ban on deposit of FOREX into bank customer’s domiciliary account, this is equally laudable.  The ban has caused untold hardship on genuine bank customers who are not involved in the sharp practices CBN governors mentioned in his press statement.

What is needful at this point in time is for CBN to strengthen its monitoring and evaluation unit and ensure that both the BDCs and bank customers operating domiciliary accounts are not allowed to abuse its policies any longer. As it has indicated, the CBN should deploy more resources to monitoring the autonomous sources BDCs are to procure their FOREX to ensure that no operator is in violation of our anti-money laundering laws.

Jide is the Executive Director of OJA Development Consult, Abuja