Foreign exchange buying rate at N360 per dollar seems unfavourable to Bureau De Change (BDCs) as over 700 operators have been rendered inactive in the market.
The BDCs 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.
Consequently, these retail forex traders are concerned that the sustainability of their businesses has been put under serious threat.
Confirming the development at the weekend, Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria (ABCON), said the BDC business had been badly affected by uncompetitive rate as the CBN sold dollars to BDCs at higher rate compared with what the regulator sold to commercial banks, yet both institutions target the same market segment and customers.
The CBN’s approved list showed that 3,389 BDC operators have been licensed to carry out the forex retail business and are expected to get $40,000 allocations weekly from 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 patronise the operators, saying 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 were 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.
He advised the CBN to take urgent steps to review the rate at which the dollar was sold to the BDCs as such would boost ongoing recovery of the naira against dollar. The naira has remained at N367/$1 at the parallel market in the last one week, a major improvement from N520/$1 it exchanged last February.
He said the success recorded by the CBN in stabilising the naira was largely contributed by the BDCs, which remain backbone of the retail forex segment of the economy.
“The CBN should be proactive enough to quickly review the BDC buying rate to ensure effective competition among all the stakeholders. There is no need to give the banks undue advantage over the BDCs as is currently the case based on the level of disparity seen in the dollar-buying rate by both sectors. Nothing stops the CBN from ensuring that both the banks and BDCs buy dollars at same rate,” he said.
Naira on Friday appreciated by N1.19k to close at N359.98k per dollar compared to N361.17k traded the previous day at the investors and exporters forex window.
At the Central Bank of Nigeria (CBN) official market, the local currency weakened marginally closing at the rate of N305.70k per dollar on Friday from N305.65k traded on Thursday, data from FMDQ revealed. Naira closed stable at the black market trading at N367 per dollar as demand pressure persisted.