Dr. Aminu Gwadabe, President of the Association of Bureaux de Change Operators of Nigeria (ABCON), says that if the bureau de change (BDC) operators are re-integrated into the value chain, they can help restore stability.
His appointment comes nearly a year after the Central Bank of Nigeria (CBN) stopped selling foreign exchange to BDCs and turned the retail market over to commercial banks.
Gwadabe had previously advocated for BDCs to be mainstreamed into the formal FX market while also allowing them to participate in the remittance business in order to deepen the market. He also suggested that a BDC autonomous window with well-defined operating rules be created.
The currency market situation has gotten worse in the last two weeks, with the dollar trading for over N600 on the parallel market. The illiquidity has been exacerbated by the dollarization of the ongoing party primaries.
Gwadabe urged on the CBN to use its broad network of BDCs to stabilize the market and accomplish the CBN’s exchange rate convergence target over the weekend.
BDCs are small retail end institutions permitted to provide personal/business travel allowance (P/BTA), overseas school tuition, and medical bill payment abroad, among other things, at the essential retail end of the market, according to the CBN FX operational handbook.
Gwadabe encouraged the CBN to return to the drawing board to begin to operationalize this role, urging the BDCs and the CBN to work together to implement market-friendly policies that would turn the former into agents of stability and economic prosperity.
The ABCON president stated that the hasty generalization that BDCs are to blame for the market crisis, as well as other allegations, are not in the economy’s or markets best interests, and that it is time to improve the sub-sector.
“We urge regulators and policymakers to regard BDCs as the most potent weapon in liberalizing the market and stopping multiple exchange rates,” he added, citing the troubling scenario and the necessity to strengthen BDCs’ value chain as attainable in organized economies.
He noted that BDCs have provided policymakers with a template for attaining exchange rate stability and price equilibrium goals since 2006, and he recommended that the monetary authority explore incorporating BDCs into the former market to maintain their impact.
Gwadabe cited the establishment of the Investors & Exports (I&E) window in 2017 as a result of agitations by ABCON leadership, international investors, Nigerians in the diaspora, and other stakeholders, claiming that BDC operators have played a crucial part in the market’s development.
“To solve the issues facing the currency market, now is the moment to integrate BDCs into market activities as a stabilizing agent,” he said, adding that ABCON members have boosted their capacity while encouraging industry efficiency and transparency.
ABCON has educated compliance officers on tracing illicit financial movements and completing taxes, according to him. He stated that the organization would continue to collaborate with the Central Bank of Nigeria (CBN), the Economic and Financial Crimes Commission (EFCC), and the Financial Intelligence Unit (NFIU) on anti-money laundering and counter-terrorist funding standards.
“Every BDC operator submits returns to the CBN in the appropriate format and within the CBN’s deadline, in accordance with the provisions of the Bank and Other Financial Institutions (BOFIA) as modified. The BDCs’ records are made easily available to CBN examiners upon request. “We also conduct customer due diligence and adhere to business governance and tax-return standards,” he added.