The policy advisory council of President Bola Tinubu has asked the federal government to increase the capital requirements of Bureaux De Change (BDCs) operators that seek to participate in Nigeria’s foreign exchange (FX) market.
In a document, titled, ‘Policy Advisory Council Report: National Economy Sub-committee’, the council highlighted key reforms that the government can implement to improve the monetary policy of the country.
It advised the government to allow the banks to operate as the primary dealers to supply the FX market through a willing buyer/willing seller model.
The council said only BDCs with a strong capitalisation should be allowed to participate in the country’s FX market.
“Raise the capital requirements of Bureaux De Change operators (BDCs) to ensure only strong, well-capitalised and automated BDCs are allowed to operate. e.g. Travelex. Introduce an effective exchange rate management system, viz the crawling peg,” the advisory body suggested.
If this recommendation is implemented, many BDC operators may be forced to shutdown.
However, the council believes that this would help in price stability to foster economic growth.
The number of BDC operators in Nigeria ballooned by more than 75-fold in 16 years.
BDC operators surged from 74 in 2005 to 5,689 in 2021, according to data from the Central Bank of Nigeria (CBN).
Prior to his suspension, the operators grew by over 100 percent under Godwin Emefiele, the erstwhile CBN governor, who was appointed into office on June 4, 2014.
Experts linked the astronomical grwoth in the number of BDCs to attractive exchange rate premiums. But regulating the operators became increasing difficult for Emefiele who had several run-ins with them.
In 2021, Emefiele banned the sales of forex to BDCs, citing their involvement in illegal financial flows and money laundering in Nigeria.
While this did not stop business for the BDCs, the federal government, through the Economic and Financial Crimes Commission (EFCC), raided offices of opertaors in the federal capital territory, Abuja, over allegations that some BDCs were mopping up foreign currencies.
Speaking on its clashes with federal government, the Association of Bureaux De Change Operators of Nigeria (ABCON) said the decision of the CBN) to discontinue sales of forex to its members, made the naira valueless.
Chioma Kalu
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