The Central Bank of Nigeria (CBN) has introduced a new operational mechanism for the Bureau De Change (BDC) segment of the market, aiming to align foreign currency trading rates with those available on the Investor & Exporter forex window. This move is part of efforts to enhance the efficiency of the Nigerian foreign exchange market.
The directive was issued through a circular (TED/FEM/PUB/FBC/001/007) dated August 17, 2023, titled ‘Operational Mechanism for Bureau De Change Operations in Nigeria’, signed by Dr. O.S. Naji, the Director of the Trade & Exchange Department at the CBN.
According to the circular, the spread between buying and selling rates for BDC operators should fall within a range of -2.5% to +2.5% of the Nigerian exchange market window weighted average rate from the previous day.
Additionally, the circular mandates BDC operators to submit statutory periodic reports (daily, weekly, monthly, quarterly, and yearly) on the financial institution forex rendition system. Failure to submit these reports can lead to sanctions, including the withdrawal of operating licenses. BDCs with no transactions during a specific period are required to submit nil returns.
Despite the new directive, there are reports that many BDCs are not complying with it, as they claim they don’t have access to forex at the official rate provided by the CBN and are unable to sell at that rate due to the scarcity and expense of the dollar.
The President of the Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, indicated that the new directive aligns BDC rates with the closing rate of the I&E (Investor & Exporter) window. This move aims to address discrepancies and ensure uniformity across BDC transactions.
While the CBN’s directive seeks to standardize foreign exchange trading practices, it seems that there is ongoing reluctance among some BDCs to fully adopt the new operational mechanism due to the challenges they face in accessing foreign currency at the official rate.