The policy advisory council of President Bola Tinubu has
asked the federal government to enforce strict guidelines for the participation
of Bureaux De Change (BDCs) operators in the foreign exchange (FX) market.
In a document, titled, ‘Policy Advisory Council Report:
National Economy Sub-committee’, the council highlighted key reforms that the
government can implement to improve the monetary policy of the country.
It advised the government to allow the banks to operate as
the primary dealers to supply the FX market through a willing buyer/willing seller
model.
The council said only BDCs with a strong capitalisation should be allowed to participate in the country’s FX market.
“Raise the capital
requirements of Bureaux De Change operators (BDCs) to ensure only strong,
well-capitalised and automated BDCs are allowed to operate. e.g. Travelex. Introduce an effective exchange rate
management system, viz the crawling peg,” the advisory body suggested.
If this recommendation is implemented, TheCable understands
that many BDC operators may be forced to shutdown.
However, the council believes that this would help in price
stability to foster economic growth.
BDCs BEFORE THE
TINUBU ERA
The number of BDC operators in Nigeria ballooned by more
than 75-fold in 16 years.
BDC operators surged from 74 in 2005 to 5,689 in 2021,
according to data from the Central Bank of Nigeria (CBN).
Prior to his suspension, the operators grew by over 100
percent under Godwin Emefiele, the erstwhile CBN governor, who was appointed
into office on June 4, 2014.
Experts linked the astronomical grwoth in the number of BDCs
to attractive exchange rate premiums. But regulating the operators became
increasing difficult for Emefiele who had several run-ins with them.
In 2021, Emefiele banned the sales of forex to BDCs, citing
their involvement in illegal financial flows and money laundering in Nigeria.
While this did not stop business for the BDCs, the federal
government, through the Economic and Financial Crimes Commission (EFCC), raided
offices of opertaors in the federal capital territory, Abuja, over allegations
that some BDCs were mopping up foreign currencies.
Speaking on its clashes with federal government, the
Association of Bureaux De Change Operators of Nigeria (ABCON) said the decision
of the CBN) to discontinue sales of forex to its members, made the naira
valueless.
ABCON also accused the CBN of criminalising its operations
to justify its inhibitive policy summersault, urging its members to “ignore
those unfortunate pronouncements.”
Although Emefiele had consistently warned Nigerians to be
cautious of trading at the parallel market, the BDC operators have bridged the
gap to FX access for citizens and businesses.
If President Bola Tinubu heeds the recommendations of the advisory
council, the bad blood between the BDCs and the CBN may either end or worsen in
his administration.
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