The Central Bank of Nigeria (CBN), in a rare courage, yesterday, ended foreign exchange (FX) supply to bureau de change (BDC) operators and registration of new players with immediate effect.
Governor of the CBN, Godwin Emefiele, in a media briefing on the outcome of the Monetary Policy Committee meeting, accused BDC operators of rent-seeking behaviour and involvement in money laundering activities, adding that the authority receives about 5,000 fresh applications monthly.The MPC retained the Monetary Policy Rate at 11.5 per cent and also retained the Cash Reserve Ratio and Liquidity Ratio at 27.5 per cent and 30 per cent respectively.
But economists have balked at CBN’s ability to hold its ground against the political class, who are often linked to the ownership of the business. Dr. Bongo Adi, a researcher and economist at Lagos Business School, admitted that the announcement was a demonstration of rare courage. President of the association, Dr. Aminu Gwabade, did not respond to inquiries on the position of the body towards the regulatory move. Previously, he had insisted operators are agents of economic growth and will cooperate with the CBN to institute sanity in the FX market.
“Overall, we believe the effectiveness of the modalities in disbursing the greenback to the retail segment through the commercial banks would determine how much the current rates at the parallel market will diverge from the NAFEX rates,” they said.Uche Uwaleke, a professor of capital market at the Nasarawa State University, described the CBN’s action as bold and timely. He said the decision was expected and well justified. “The decision to stop forex sale to BDCs has its merits and demerits.
The restriction of the BDC operator is just one of the series of regulations the CBN has embarked on. It had earlier replaced the highly discounted CBN official rate with the NAFEX window, a fairly liberal segment in which its exchange rate unification programme is anchored. The stoppage of FX sale to BDC operators may have taken the programme a step further as the country battles its currency crisis.
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