The Association of Bureaux De Change Operators of Nigeria (ABCON) has called on the Central Bank of Nigeria (CBN) to remove restrictions that makes it difficult for Bureaux De Change (BDCs) to compete for the $20 billion inflow in the unofficial forex market.
Also, the association has lamented the rising import bill of the country and called on the federal government (FG) to deploy measures to tackle the challenge given its grave implication for the naira exchange rate.
The association stated this in its Quarterly Economic Review Report for the fourth quarter of 2021 (Q4’21), noting that the stoppage of dollar sales to BDCs by the CBN had triggered a period of reformation and realisation of the potential of its members.
These potential, ABCON noted, included the estimated $20 billion annual inflow in the unofficial forex market, which far exceeded the annual dollar cash sales to BDCs by CBN.
Another potential for BDCs, ABCON added, was the gap created by the stoppage of forex funding of BDCs by CBN, adding that the gap was obvious as many medium and small scale users of foreign exchange for imports have experienced untold hardship in processing form ‘M’ in deposit banks.
“These and more opportunities are open to the BDC sub sector to research and evolve operational strategies and techniques without recourse to funding from CBN,” ABCON stated.
The association however called on the CBN to withdraw all restrictive and handcuffing controls which may hinder the ingenuity of the BDCs and thus their ability to explore the potentials highlighted above.
On the other hand ABCON called on the federal government to tackle the factors driving the rising trend in the nation’s import bill which it noted is heightens pressure on the external reserves and the naira exchange rate.
It stated: “Data from the National Bureau of Statistics show that Nigeria’s import bill rose by 51.1 per cent year-on-year to N8.15 trillion in Q3 2021. For as long as imports are increasing without matching equivalents in exports or foreign exchange inflows, the currency must depreciate.
“By principle a depreciated currency makes exports of a country cheaper in the international market thereby increasing inflow of foreign exchange but unfortunately for Nigeria the sectors where it has comparative advantage to excel is grossly traumatised by terrorism and insurgency due to lack of will power of government to control the situation.
“The serious consequences of the continuous trade deficit is that it has also affected the country’s balance of payment account, thereby causing more pressure on the exchange rate.
“Notably, the official exchange rate at the Investors and Exporters (I&E) window depreciated by 6.03% to close the year at N435/$1 while a 22.8% depreciation was recorded at the parallel market to close at N565/$1.
“Inflation-linked devaluations, which often seemingly lead to ever higher rates of inflation in the absence of sound domestic policies, are damaging.
Government should allow economic reasoning to outplay political tendencies which in the long run may lead the economy into catastrophic consequences.”