Nigeria: BDCs Urge CBN for Inclusion in Exchange Rate Policy for its Success

Bureau de Change (BDC) operators are calling for increased participation and involvement in the foreign exchange market to ensure the success of the new exchange rate policy implemented by the Central Bank of Nigeria (CBN).

On June 14, 2023, the CBN announced the unification of all segments of Nigeria’s foreign exchange market, consolidating all windows into one. This move aimed to improve liquidity and stability in the Nigerian Foreign Exchange (FX) Market. As part of the directive, commercial banks were permitted to remove the rate cap at the Investors and Exporters (I&E) window, allowing for a free float of the naira against global currencies.

The CBN’s decision to float the currency and unify the exchange rates has received praise from the organized private sector, financial experts, and economists. They believe this will bring transparency, stability, and attract foreign investment into the economy.

However, BDC operators have expressed dissatisfaction with the exclusion of BDCs from the I&E window and the focus on the banks. They argue that BDCs play a crucial role in addressing the retail end of the market and ensuring exchange rate stability.

Aminu Gwadebe, the President of the Association of Bureau De Change Operators of Nigeria (ABCON), stated that despite the new exchange rate policy, the forex market remains volatile because BDCs are excluded from the I&E window. He emphasized the need for collaboration between the CBN and BDCs to achieve the mission of the I&E window.

Gwadebe highlighted the significant exchange rate disparity between the I&E window and the parallel market, which has not been adequately addressed by the CBN. This disparity has negatively affected liquidity in the forex market.

To address these concerns, Gwadebe called for a legal and regulatory framework for the forex market that includes BDCs. He emphasized the importance of legislation to support existing policies and strengthen the operations of the FMDQ, which manages the forex market.

While some BDC operators mentioned that the new exchange rate policy has not significantly affected their business, stating it is a mixed situation, they still believe in the importance of an inclusive approach in the forex market.

In conclusion, BDC operators are urging the CBN to include them in the exchange rate policy and seek legislative support to enhance liquidity, competitiveness, and sustainability in the market.