The Central Bank of Nigeria (CBN) recently announced that after accusing BDC operators of failing to comply with their core responsibilities, it suddenly stopped selling and outsourcing foreign exchange to them. It is believed that BDC does not provide foreign exchange to retail users, but provides scarce resources to so-called “illegal” dealers.
BDC operators accused of facilitating parallel market activities
In turn, illegal traders provide customers with foreign exchange at parallel market exchange rates. For example, although CBN insists that the exchange rate of naira to the US dollar is currently fixed at around 411 naira per dollar, parallel market traders use an exchange rate of 500 naira per dollar.
In explaining the reasons behind CBN’s decision to terminate foreign exchange sales to BDC, Governor Godwin Emefiele stated that operators have been making huge profits at the expense of Nigerians. Therefore, CBN’s intervention aims to end this practice. Emefeller explained:
This measure is not to punish anyone, but to ensure that CBN can fulfill its legitimate mission of serving all Nigerians.
Commercial Bank Warning
As a result of Emefiele’s announcement, CBN “will no longer process BDC license applications in this country”. On the other hand, CBN’s weekly foreign exchange sales will now “direct into commercial banks.”
At the same time, Emefeller also used his speech after the CBN Monetary Policy Committee meeting to remind commercial banks that the central bank will “relentlessly handle” any institution that allows “illegal foreign exchange dealers to use its platform”. . “
Emefiele also criticized international institutions including embassies and donor agencies for participating in what he called “illegal foreign exchange transactions that hinder the flow of foreign exchange into the country.”
Do you think that mere termination of foreign exchange sales to Bureaus de Change will help prevent the flow of funds to parallel markets? Tell us what you think in the comments section below.
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