Bureau De Change Offers CBN Lifeline Over Scarcity Of Forex

The president of Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, has offered a solution to the Central Bank of Nigeria (CBN) over the continuous scarcity of foreign exchange (forex) in Nigeria. Gwadabe urged the CBN to allow the bureau de change assist in providing forex in order to meet demands.

Since the COVID-19 pandemic and lockdown measure adopted by countries globally, Nigeria have been having forex shortage, and the demand is affecting the exchange rate, as the demand for dollar increases the pressure on Naira. Nigeria's foreign exchange sources like Airport was on lockdown for over three months, while oil revenue - Nigeria's major forex source - has also been struggling due to low demand for crude oil and fall in oil price.

In order to reduce the pressure on the CBN to make dollar available for domestic businesses and individuals that need to make payment abroad with dollars, Gwadabe said the bureau de change should be allowed into the FMDQ floor and also provide for diaspora remittances agencies.

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He said the involvement of the bureau de change will ensure long term exchange rate stability in the economy, as the bureau de change serves as a bridge to available forex, “The immediate thing to be done to crash the rate is the reopening of the BDC window for school fees payments pending when the international air travels resume,” Gwadabe said.

"The germane role of BDCs is bridging the gap between the official rates and the parallel market rates, which was achieved from early 2017 to early 2020.”

The CBN Don't Trust Bureau De Change

The Governor of CBN, Godwin Emefiele, labelled the parallel market as a place where illegal businesses go for dollar exchange. There are three exchange rates in Nigeria; CBN's, Investors & Exporters Window and the Bureau De Change, but Emefiele says only the first two are recognised.

Emefiele stated that the parallel market is a black market were individuals or companies dealing in businesses not recognised by the authorities go to. He said people who do not want to fill necessary documents often prefer the parallel market due to its lack of scrutiny.

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"The CBN has always maintained that the black market is not a good determinant of the value of the naira. You’ll find that people who are in a hurry and do not want to procure the kind of documentation required, will sometimes rush to those markets. But we have used the period of this pandemic to prove that anybody dealing in that market is dealing in an illegal business.” Emefiele said in a report by AllNews.

Illegality Made CBN Choose NSFEX For Exchange Rates Unification

While revealing the reason CBN went ahead to choose to unify the exchange rates in line with the rates of the Investors & Exporters window also known as NAFEX, Emefiele said the illegality was a critical factor that informed their choice. He explained that with legitimate businesses shut down during the two months lockdown and yet BDC was still receiving demand for forex, then the demand has to be from people involved in illegal business.

"It could only be those who are dealing in what is simply called corrupt practices that will be dealing in that market and we are not about to talk about unification of our exchange rate around people who are dealing illegally,” Emefiele added. He advised people in need of forex to patronise the recognised I&E window.