ABCON Faults Alleged Arbitrage in Forex Market

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Obinna Chima

The Association of Bureaux De Change Operators of Nigeria (ABCON) yesterday described as untrue the insinuation that there is arbitrage opportunity in the foreign exchange (forex) market.

ABCON President, Alhaji Aminu Gwadabe said this while presenting a speech during the launch of ‘ABCON’s Live Automation Project,’ in Lagos.

“I can tell you that N306 to a dollar is not even a transaction rate, N306 to a dollar is only for the payment of debt by the federal government and for some few critical transactions. Our members would like to know that market where we can get dollar at N306, because if there is, I am sure some of us would be aware of it,” Gwadabe told his audience.

According to the currency dealer, the naira has been stable at both the official and parallel markets despite huge campaign spending by political parties. He linked the stable exchange rate to measures instituted by the Central Bank of Nigeria (CBN) and his association to ensure that foreign exchange demand at the retail end of the market was met.

Gwadabe listed such measures to include the sustenance of dollar supply to over 4,100 BDC operators across the country through the International Money Transfer Operations (IMTOs) forex window, which he said had helped the status of the local currency.

“The naira remains stable despite political party’s campaigns and spending across the nation. The strategic partnership, actions and pre-actions of the CBN and ABCON have stopped distortions to the exchange rate due to ongoing politicking and campaign spending in the country

“ABCON has on its part, ensured that its members continue to make dollar accessible to critical end-users like travellers demanding personal and business travel allowances, school fees and medical bills payment abroad among others,” he said.

He said ABCON was aware that money laundering and terrorist financing posed not only enormous threat, but also enormous challenges to the economy, security, and social life of Nigerians, the West Africa region and globally.

Owing to this, he disclosed that a joint study conducted by the Global Financial Integrity (GFI) and the African Development Bank (AfDB) had shown that between 2000 and 2009, about $30.4 billion was illicitly transferred out of Africa each year. Over a longer period of 30 years, calculated from 1980, the resource drain was between $1.2 and $1.3 trillion.

According to this, outflows from West and Central Africa stood at 37 per cent, followed by North Africa -31 per cent and Southern Africa – 27 per cent.

The illicit financial flows (IFFs) are derived from various predicate offences of money laundering.

“I want to assure you that BDCs under ABCON do not want to be part of the groups contributing to the IFFs and therefore, we are doing everything within our power to ensure we comply with AML/CFT rules in Nigeria,” he said.

The ABCON boss pointed out that the BDC sector is confronted with many challenges that have continued to defile solutions.

Some of them he listed include multiple exchange rate, abnormal bank charges, Value Added Tax (VAT) and Commission on Turnover (COT), parallel market operators and illegal International Money Transfer Operators (IMTOs), porous international boarders, complex documentation requirements and poor capacity/ skills of operators.

“For instance, the increasing difficulties arising from over regulation and complex documentation requirements that licensed BDCs are facing in carrying out their daily legitimate operation is disturbing.

“These hitches have negative impact on BDCs’ efforts toward compliance to statutory and regulatory requirements. Already, six units within the CBN are involved with BDC regulations, supervision, licensing, monitoring.

“This, no doubt, constitutes multiple regulation of a unit of the financial sub-sector that is only involved as a small market player,” he added.