Some Bureau De Change (BDC) operators under the aegis of Association of Bureaux De Change Operators of Nigeria (ABCON) have appealed to the Central Bank of Nigeria (CBN) to reduce foreign exchange (forex) buying rate from N360 to N350 to the dollar.
President of the Association, Aminu Gwadabe made the appeal on Wednesday after an emergency meeting with 3,500 CBN-licensed BDCs in Lagos. He explained that the operators’ businesses may go underground unless the CBN listens to their demands.
He said small transaction margins charged by BDCs are not sufficient to keep their operations going, with many operators running at a loss and unable to pay their workers’ salaries.
Gwadabe, who was represented by ABCON National Treasurer, Gbadamosi Moh-Murtala, said the CBN has also been informed on the need to change the commission on transaction of BDCs from N2 to 3.5 per cent of the transaction volume for the sustainability of their businesses.
“We are happy that the exchange rate is appreciating. The major problem now is how BDCs can operate without making losses. Many of the BDCs are buying at higher prices and selling lower prices. They sometimes sell below CBN’s rate which is N360 to dollar. That is not event enough to cover overhead left alone profit,” Gwadabe said.
According to the ABCON boss, the CBN should at the meantime, peg the BDCs buying rate at N358 to dollar to enable them sell at N360 to dollar while it works on longer-term plan of cutting the rate to N350 to dollar and allow them sell at N355 to dollar.
He said the challenges faced by BDCs are enormous, as many forex users now prefer to buy their Business Travel Allowances (BTA), Personal Travel Allowances (PTAs), medical bills and school fees payment abroad through the banks instead of BDCs following the rate disparity that does not favour the BDCs. He added that the CBN could also, sell dollar to BDCs at same rate it sells to banks, since both sell to the same customers.
He added: “Even the CBN knows that we are making losses. We are currently out of the market but we have decided not to boycott the market despite the challenges we face. It is better we dialogue. Our body language is to support government policy but while we are doing that, we want the CBN to lower our buying rate”.
Gwadabe said the BDCs helped the government reduce unemployment rate, adding that any policy that pushes the BDCs out of the market will worsen the unemployment rate in the economy.
He said the ABCON is also working closely with the CBN to ensure that more sources of forex to the BDCs are explored, especially in getting them to buy export proceeds.
He however, urged operators to be transparent in their operations and file their returns accurately as such would encourage the CBN to support their operations.
He also said the group is collaborating with the Nigerian Interbank Settlement System and the CBN to automate BDCs’ processes to enhance transparency. He said the BDCs’ can begin to access dollar from International Money Transfer Operators (IMTOs) directly if the right technology exists. “The automation allows NIBSS to confirm international passport and Bank Verification Number (BVN) authenticity of forex buyers. At ABCON, security of transactions remain our priority,” he said.
He also said the CBN will be urged to allow operators up till March 31, to pay N250,000 annual licence renewal fee instead of the January 31 deadline set by the regulator.
Gwadabe said the CBN and Travelex would need to take steps to ensure that the weekly forex disbursements are done on time for the security of their members. “We have told our members to reject any dollar disbursement after 3pm on the selling day. Once it is 3pm, we will abandon the money for Travelex because the security of our members is paramount,” he said.
The ABCON boss said the group will continue to align with the CBN’s vision of providing a stable framework for the economic development of Nigeria through effective, efficient, and transparent implementation of monetary and exchange rate policy, and management of the financial sector.