*ABCON reads riot act to members, says no longer business as usual
James Emejo in Abuja
In a major development aimed at financial stability and strengthening the naira, the Central Bank of Nigeria (CBN) plans to resume its weekly intervention in the country’s foreign exchange (FX) market through the Bureau de Change (BDC) operators, THISDAY has gathered.
In 2021, the central bank, in a bid to achieve its mandate of safeguarding the value of the local currency, ensuring financial system stability, and shoring up external reserves, announced the immediate discontinuance of foreign currency sales to Bureau de Change (BDC) operators in the country.
However, the resumed intervention, which would reportedly commence today for funding as well as Tuesday for collection, will see the apex bank inject FX into the subsector in a bid to rescue the naira from further depreciation against major currencies, particularly the US Dollar.
The collection will be at designated CBN branches in Lagos, Abuja, Kano, and Awka, while details of the naira accounts to be credited for funding bidding will also be made available today.
CBN is also expected to publish the list of eligible BDCs to benefit from its funding using certain compliance criteria.
National Executive Council of Association of Bureau De Change Operators of Nigeria (ABCON) hinted on the latest developments through a memo to its members over the weekend.
The association also warned members that it will no longer be business as usual under the new supervisory regime of the central bank, as any infringement or infraction would result in outright revocation of license and prosecution.
ABCON said through the association’s various engagements with the central bank, in conjunction with ABCON’s strategic partners, CBN had agreed to its request, under the bank’s supervision, to inject liquidity into the market through a weekly intervention beginning today.
CBN assured ABCON that the new circular on the Revised Regulatory and Supervisory Guidelines to BDCs, which was introduced over the weekend, was only a draft exposure that required the association’s inputs before the release of the final guidelines by the apex bank.
To that effect, the letters of the guidelines were not cast in stone, the association’s leadership told its members, who had been worried over the sweeping reforms in the document, which, among other things, prescribed N2 billion and N500 million minimum capital for national and state BDCs, respectively.
The framework significantly enhances the regulatory framework for the operations of BDCs as part of ongoing reforms of the Nigerian Foreign Exchange market.
The document revises the permissible activities, licensing requirements, corporate governance, and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) provisions for the operators, and sets out new record-keeping and reporting requirements, among others.
Analysts, however, expressed cautious optimism over the resumption of CBN intervention through BDCs.
A source told THISDAY, “From history, every time CBN has reverted to weekly sales to BDCs after a long period of excluding them from the official window, the FX rate had retreated significantly, almost immediately. Let’s see what happens this time around.”
However, the suspension of the sale of FX is consistent with the provisions of the CBN Act 2007 (as amended), which grants the bank the mandate to ensure the maintenance of the country’s foreign reserves as well as the stability of exchange rates.
The central bank had also suspended the applications for and issuance of new licenses for BDC operations in the country effective July 29, 2021.
Efforts by THISDAY to have ABCON President, Mr. Aminu Gwadabe, speak on the development proved abortive, as he told the newspaper via phone that he was unable to comment because he was in the mosque. He never answered his calls afterwards till press time.
Efforts to get the CBN to comment on the development also did not yield results. The apex bank Governor neither answered calls to his phone nor responded to text messages as at the time of going to press.
