The Central Bank of Nigeria (CBN) has once again begun the sales of forex to Bureau De Change (BDC) operators in Nigeria, more than two years the apex bank stopped the sales of FX to BDCs.
Recall that the CBN stopped the sales of forex to more than 4,000 BDCs operators on July 28, 2021, accusing them of sabotaging the effort of the government.
CBN under the sacked Godwin Emefiele leadership, CBN had accused them of being used to launder money for politicians and for other illicit funds.
But in a bid to bring sanity to the foreign exchange market after the floating of Naira and the unification of the FX exchange rate, the apex bank has brought back BDC operators.
In a communique signed by the Director, Trade and Exchange Department of CBN, Dr. O.S. Nnaji, the apex said BDC operators are to submit “statutory periodic reports (daily, weekly, monthly, quarterly and yearly) on the Financial Institution Forex Rendition System (FIFX) which has been upgraded to meet individual Operator’s requirements.”
The statement which is titled, “Operational Mechanism For Bureau De Change Operations In Nigeria” reads:
In support of the drive to improve the efficiency of the Nigerian Foreign Exchange Market, the Central Bank of Nigeria hereby announces the underlisted operational mechanism for the Bureau De Change (BDC) segment of the market:
The spread on buying and selling by BDC Operators shall be within an allowable limit of – 2.5% to +2.5% of the Nigerian Foreign Exchange market window weighted average rate of the previous day.
Mandatory rendition by BDC Operators of the statutory periodic reports (daily, weekly, monthly, quarterly and yearly) on the Financial Institution Forex Rendition System (FIFX) which has been upgraded to meet individual Operator’s requirements.
CBN Circular of August 17, 2023
Non-compliance to attract sanctions
The communique says non-rendition of returns would attract sanctions which may include withdrawal of operating license.
And in a situation whereby operators do not have any transactions within the period, they are expected to render nil returns.
What does this mean?
While former CBN governor Emefiele believed that BDC operators were no longer useful in FX exchange market, his successor who is in acting capacity Folashodun Adebisi Shonubi believes that the reintroduction of sales of forex such as dollars, EUR, and Pounds to BDCs would provide more stability and transparency to exchange rate fluctuations, at the same time benefiting both BDC and the general public.
Since May 29, 2023, Nigeria has been experimenting on ways to stabilize the turbulent forex market including the plan to change I&E window to NFEM and Price Verification System portal for importers by the end of August.
Today’s BDC rate
Since Emefiele technically ‘banned’ BDCs from the FX market, the operators of the market have completely taken their trade to the black market.
At the end of trade today, Friday, August 18, 2023, buy/sell rate closed: 840/870 for USD/NGN; 920/950 for EUR/NGN, and 1140/1180 for GBP/NGN while the I&E window closed at $/N739.52.