I think the Central Bank of Nigeria (CBN) ban of forex sales to Bureau De Change (BDC) operators is a right step towards stopping illegal trading and exploitation by the BDCs. However the abruptness of the decision at a time when Nigerians are grappling with rising food prices and surging inflation leaves much to be desired. The ban doesn’t stop the operations of BDCs hence they are likely to source forex from third parties.
Also, Bureau De Change operators are easily accessible to ordinary citizens and small businesses, hence their preference in comparison to regular banks for currency transactions. Businesses dealing with items not on the CBN list may also find it difficult accessing forex from the banks hence causing pressure at the parallel market which will eventually have an effect on the whole economy. Unless banks are able to effectively adhere to CBN’s policy and serve Nigerians well, the desired positive effects of the move by the CBN may not materialize. Only time can tell.
The decision of the apex bank to discontinue sale of foreign exchange to BDC operators will help to curb corruption. It is a measure that will help to stabilize the naira as every transaction in the bank would be well documented. But the CBN needs to look into other aspects of the economy. I know BDC operators were being managed by one or two persons, which often aided money laundering activities.
I feel it will raise the prices of dollar further especially at the parallel market. BDCs have better access to the banks than individuals, so they will end up buying all the FX and sell at higher price outside. I strongly feel it is not the right time for this at this perilous time. This will create a general inflation to the ecosystem and the dollars will be scarce whereby some banks will start seeing it as an avenue of doing business. There will also be a bias distribution of dollars in banking industries. It will bring massive unemployment for the Bureau de Change business men and lastly there won’t be any flexibility in monetary exchange.
It is a good development as genuine importers will now be able to get required foreign exchange for their business transactions. I must say BDC operators are part of the country’s problem of finding a way to stabilize the naira. If the policy is well implemented, there will be a major increase in inflation rate because the cost of goods and services will move up, since a lot of them are dollar based.
The CBN’s decision is welcome if it will impact positively on the economy and make the dollar available to the end-users without the usual recourse to the black market. Notwithstanding, there are fears that the BDCs will still operate in disguise and heighten market speculation. Since it will be easier to procure dollar at the black market, the CBN must supply enough forex to the money deposit banks. If not, it has barely scratched the symptoms of the condition. I believe that the new policy can only succeed if the apex bank can supply enough forex to the banks and ensure that the banks actually sell them to end-users and not the ubiquitous black market operators.
Well, CBN has the utmost power over any monetary activities in Nigeria since it is the apex bank that monitors and regulates financial institutions in Nigeria. The reason why CBN placed ban forex sales to Bureau De Change operators is best known to them but I believe the ban will further cause hardship in the country because those working as agent of BDCs will be unemployed and will have to start looking for another type of work to do, which might eventually lead to increase in crime rate since they have to look for any means to survive. Another issue is that it will be very difficult for people to easily covert foreign currencies to naira because of the long process it will take for an individual to do so in the bank, which might hinder the immediate financial responsibilities of such individual. I think CBN should look at these issues critically in order not to cause more havoc to the economy.
The policy will help to tackle corruption and money laundering. It will also go a long way in sanitizing Nigeria’s forex market. I must admit that this policy can cause temporary discomfort but in the long run, the gains are enormous and will be permanent.
The ban should be reviewed because the action will further worsen the Nigerian economy. It will bring untold hardship on families who depends on forex trading to earn their living. I know there are bad eggs among the BDC operators but notwithstanding, it is an unfair treatment as many families will lose their means of livelihood. I would rather suggest that instead of the ban, let the government increase the price and give the dollar to the operators because it will cause job losses to operators’ members nationwide.
This policy may not work because banks also have their illicit modus operandi structures besides the illicit influx that will also stop in a bid for such operators to hide their identity and which will practically result to forex shortages and further devaluation of the naira. I feel what is best for this ban, is getting a digital naira app that could solve the problem, because the fact that everybody will have digital dollar and naira app on their phones, they can therefore convert and remit it to the appropriate quarters at will and the operation will also leave identity of the illicit operators undisclosed. For instance, if I am an illicit forex operator, I can engage 10 people for forex conversion with their phones to spread the bulk conversion that could raise an alarm from digital monitoring unit from the CBN or any regulators put in place for such purpose.
This is a fire brigade approach solution; it won’t solve the problem. You will be shocked to learn that the bankers at the forex desk commit more forex fraud than the BDC operators. The solution is to float and have one single exchange rate. Nigeria will keep having problems if banks/BDC can buy dollar from CBN at N411 and sell to customers at N500 or even more. Let them float it and have a single exchange rate.
This is a welcome development because the BDC operators have forgotten the reasons they were licenced. They have turned themselves away from their objectives and now act as agents that facilitate corruption in the country. Also, I feel the decision to eliminate the BDC operators from the FX market was also necessitated by their dubious and unwholesome practices. The operators have gone beyond their primary role of being retail dealers of FX to wholesale dealers. I want you to know that several international organisations and embassies patronize BDCs through illegal forex dealers to fund their organisations. If government wants to ensure that this ban is effective, they should deal ruthlessly with Nigerian banks that deal with illegal BDCs and report foreign organizations patronizing them.
This decision is in the right direction towards bringing sanity to the foreign exchange system. Also, this development will correct so many troubles in Nigeria like tackling of corruption, money laundering and terrorism among other societal ills in the nation. Most BDC operators are very rich without owning factories or industries but feeding fat on the nation’s forex. I must admit that like any other good policies, this policy can cause temporary discomfort but in the long run, the gains are huge and will be permanent. We all need to accept this new policy and support the government on this to set the nation’s economy on the path of sustainable growth.
This is a welcome development because most of the BDC operators are not affected by the situation of the country because they are making excessive profits from the allocations they get weekly from the CBN to the detriment of the people. These operators have become agents that facilitate corruption in Nigeria and I feel CBN has tolerated this enough, hence the reason for this prompt decision. The ban did not stop the operations of the BDCs; but only means that operators will have to source forex from other suppliers but not the Central Bank.
It is a necessary step to sanitise the forex market. The purpose of BDCs had been defeated with most of them falling short of their mandates. If you make findings very well, there are so many BDC operators in Nigeria all trying to make millions of naira to themselves. It is high time CBN took the right decision. It is a commendable one and I must say kudos to the Governor of Central Bank of Nigeria for taking this step.
The Central Bank of Nigeria (CBN) need to reconsider this ban because it would create some challenges in the market as commercial banks might not be able to meet the forex demands of importers. Not all the BDCs are bad but as it is now, CBN has banned both the good and the bad. This disciplinary measure by the CBN can negatively affect the forex trading market. Most businessmen, when they cannot access forex from commercial banks, rush to the BDCs. Banks are not perfect, they also bend the rule sometimes but that of the BDCs became so obvious due to their large numbers. I urge the apex bank to look into this decision before it gets out of hand.
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