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CBN bans sale of forex to BDCs, but lifts ban on cash deposits into dom accounts

CBN bans sale of forex to BDCs, but lifts ban on cash deposits into dom accounts
January 11
18:52 2016
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Godwin Emefiele, governor of the central bank of Nigeria (CBN), says the apex bank will no longer sell foreign exchange to bureau de change operators, whom he regarded as being greedy.

Emefiele said the CBN would now allow commercial banks to accept cash deposits of foreign exchange from their customers.

“We have continued to observe that stakeholders in some of the subsectors have not been helpful in this direction. In particular, we have noted with grave concern that Bureau de Change (BDC) operators have abandoned the original objective of their establishment, which was to serve retail end users who need US$5,000 or less,” he said.

“Instead, they have become wholesale dealers in foreign exchange to the tune of millions of dollars per transaction. Thereafter, they use fake documentations like passport numbers, BVNs, boarding passes, and flight tickets to render weekly returns to the CBN.

“Despite the fact that Nigeria is the only country in the world where the Central Bank sells dollars directly to BDCs, operators in this segment have not reciprocated the Bank’s gesture to help maintain stability in the market.

“Whereas the Bank has continued to sell US Dollars at about N197 per dollar to these operators, they have in turn become greedy in their sales to ordinary Nigerians, with selling rates of as high as N250 per dollar.”

He said the BDCs had risen from 74 in 2005 to 2,786 in 2016, with about 150 new BDC applications coming in every month, with same promoter owning multiple BDC outlets.

“The CBN sells US$60,000 to each BDC per week. This amount translates to US$167 million per week, and about US$8.6 billion per year.

“In order to curtail this reserve depletion, we have reduced the amount of weekly sales to US$10,000 per BDC, which translates into US$28.4 million depletion of the foreign reserve per week and US$1.476 billion per annum.

“This is a huge hemorrhage on our scarce foreign exchange reserves, and cannot continue especially because we are also concerned that BDCs have become a conduit for illicit trade and financial flows.”

He said that following the alleged activities of the BDCs, the CBN “would henceforth discontinue its sales of foreign exchange to BDCs”.

“Operators in this segment of the market would now need to source their foreign exchange from autonomous source. They must however note that the CBN would deploy more resources to monitoring these sources to ensure that no operator is in violation of our anti-money laundering laws.

“The Bank would now permit commercial banks in the country to begin accepting cash deposits of foreign exchange from their customers.”

The CBN sold dollars to BDC operators for the better part of 2015, in its bid to keep the official and unofficial price of the naira close to each other.

A BDC agent who spoke to TheCable in Lagos said he had been debited on Monday for bidding for foreign exchange, unclear as to whether he would get forex or not.

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4 Comments

  1. Dave
    Dave January 11, 22:57

    Please how can we get dollars for our daily business transaction because this BDCs are the people we get our dollars from which we use to pay import duties and they are the approachable people close to us . ADVICE PLZ

    Reply to this comment
    • Otunba
      Otunba January 12, 12:22

      You can still get from BDCs, just that they also would now get from autonomous sources. It may be a little more expensive.

      Reply to this comment
    • Bawa
      Bawa January 12, 17:05

      The way you get foreign exchange prior to the time when CBN started selling FX to BDCs ten years ago ie either through banks or BDCs will be the same way you get your FX for any foreign business transaction. You will recall that initially CBN doesn’t sell FX to BDCs. It started selling to them early in 2006. It suspended sometimes in 2009 and later commenced selling to them. Now there will be a little uneasiness but I am sure there will be some way out. Like every policy which sometimes comes with some problems, definitely there must be a way out. I am sure any policy is subject to reviewing if the need arises. May God see us through (ameen).

      Reply to this comment
  2. kenny
    kenny January 13, 15:04

    THIS IS A BIG PROBLEM TO US WHO SCHOOL ABROAD.HOW CAN I PAY SCHOOL FEES?PLEASE IS THERE ANY WAY TO MAKE MONEY TRANSFER TO MY SCHOOL BANK INTERNATIONALLY?
    I WENT TO THE BANK TODAY AND WAS TOLD I CAN`T MAKE ANY TRANSACTION TO BANKS INTERNATIONALLY.

    Reply to this comment

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Exchange Rates

August 01, 2019USDGBPEUR
INTERBANK306397354
LAGOS362475413
KANO361474413
PH361475412
ABUJA362476413
NOTE: The black market rates represent the most prevalent. They could be slightly higher or lower among different sellers.
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