Over 700 BDCs inactive in CBN’s FX window

… as fear of job loss looms

More than 700 Bureau De Change (BDC) operators have in recent months been rendered inactive in the Central Bank of Nigeria’s (CBN’s) Forex Window.
This has put the sustainability of their businesses under serious threat.

Confirming the development at the weekend, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe said the BDC business has been badly affected by uncompetitive rate, as the CBN sells dollars to BDCs at higher rate compared to what the regulator sells to commercial banks, yet both institutions target the same market segment and customers.

The BDCs, he said, buy dollar from the CBN at N360/$1 and sell to end users at N362/$1, while the regulator sells to commercial banks at N358/$1 and the banks sell to end users at N360/$1.

The CBN’s approved list showed that 3,389 BDC operators have been licensed to carry out the business and are expected to get $40,000 allocations weekly form the CBN Forex Window. The apex bank disburses about $135.5 million to the 3,389 registered BDCs on weekly basis to sell to forex end users.
The funds are needed for settling demands for Personal Travel Allowances (PTA), Business Travel Allowances (BTA), medical needs and school fees payment abroad.

Gwadabe described the buying rate for the BDCs as uncompetitive and a big disincentive for many forex users to patronize the operators. He said the banks and the BDCs operate and service the same market segment, and should get dollars at the same rate to enable both institutions compete favourably.

According to the ABCON boss, the banks enjoy large customer base with the customers able to carry out their transactions by having their accounts debited to cover the cost of purchase. He said such convenience plus a lower rate put the banks at advantage position to attract more customers than BDCs.

He lamented that BDCs are not only buying at exorbitant rate, but also sell at a rate higher than that of the banks hence, creating low patronage for the operators.

Gwadabe advised the CBN to take urgent steps to review the rate at which the dollar is sold to the BDCs as such would boost ongoing recovery of the naira against the dollar.
The naira has remained at N368/$1 at the parallel market in the last one week, a major improvement from N520/$1 it exchanged last February.