Bureau de Change (BDC) operators in Nigeria are advocating for greater involvement in the foreign exchange market to ensure the success of the Central Bank of Nigeria’s (CBN) new exchange rate policy. The CBN recently announced the unification of all segments of the country’s foreign exchange market, with the aim of improving liquidity and stability.
Under this directive, commercial banks were granted permission to remove the rate cap on the naira at the Investors and Exporters (I&E) window, allowing for a free float of the currency against global currencies. This decision has been widely praised by the organized private sector, financial experts, and economists, who believe it will bring transparency, stability, and attract more foreign investment and capital inflow into the economy.
However, BDC operators, also known as BDC forex dealers, have expressed their dissatisfaction with the exclusion of BDCs from the I&E window. They argue that BDCs play a critical role in addressing the retail end of the market and ensuring exchange rate stability in the country’s economy. Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), emphasized that despite the new exchange rate policy, the foreign exchange market remains volatile because BDCs are excluded from the I&E window.
Gwadebe highlighted the significant exchange rate disparity of about N30 between the I&E window and the parallel market, indicating that the CBN has yet to adequately address the retail end of the market primarily served by BDCs. This disparity has adversely affected liquidity in the foreign exchange market. Gwadebe stressed the need for a legal and regulatory framework to supervise and manage the forex market. He called for legislation to support existing policies and strengthen the operations of the Financial Markets Dealers Quotations (FMDQ), which manages the forex market.
Another BDC operator mentioned that the new exchange rate policy has had a mixed impact on their business. They stated that foreign exchange users still prefer to patronize BDCs, as commercial banks sometimes offer higher rates and may not always have sufficient funds available. Therefore, these operators do not see an immediate need to be part of the I&E window since BDCs already source their funds from autonomous sources.
Overall, BDC operators are urging for a more inclusive approach in the foreign exchange market. They are seeking legislative support to enhance liquidity, competitiveness, and sustainability in the market. These operators believe that involving BDCs in the new exchange rate policy would contribute to a more stable and efficient foreign exchange market in Nigeria.
