CBN Bans sales of Forex to BDCs

CBN bans sales of forex to BDCs. The Central Bank of Nigeria (CBN) on Tuesday, July 27 has announced an end to the weekly allocation and sale of foreign exchange to Bureau De Change (BDC) operators in the country.

In a press briefing on Tuesday afternoon, Godwin Emefiele, the Central Bank Governor made the announcement on while telling reporters on the outcomes of the Monetary Policy Committee (MPC) meeting in Abuja, the Federal Capital Territory (FCT).

The announcement was made as the bank intensifies efforts to alleviate further decline of the nation’s economy and the country’s currency.

He said international bodies, including some embassies and donor agencies, have been complicit in illegal forex transactions that have hindered the flow of foreign exchange into the country.
He accused the BDC operators of facilitating grafts, illicit financial flows, and money laundering in the country. That is why CBN bans sales of forex to BDCs.

“In total disregard of the difficulty that the (apex) bank is facing in meeting its mandate of maintaining the country’s foreign exchange reserves to safeguard the value of the naira, we have continued to observe that stakeholders in some of the sub-sectors have not been helpful in this direction,” he added.

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Bureau de change operators have long been a major black market, providing exchange rate support to those unable to formally access foreign currencies directly from the CBN. The suspension of their ability to source foreign exchange from the CBN could have a significant impact on the country’s economy and bring naira under further pressure.

The CBN Governor added, “In particular, we have noted with disappointment and great concerns that our Bureau De Change operators have abandoned the original objective of their establishment which was to serve retail end users who need $5,000 or less.

“Despite the fact that Nigeria is the only country in the world today where a central bank sells dollars directly to Bureau De Change operators, operators in the Nigerian Bureau De Change segment have not reciprocated the bank’s gesture to help maintain price stability in that market.

“Given this behaviour, it is not surprising that since the CBN began to sell foreign exchange to Bureau De Change, the number of operators has risen from a mere 74 in 2005 to over 2,700 in 2016 – and almost 5,500 BDCs as of today (July 27, 2021),” Emefiele said.