Diaspora Remittances:  BDC Operators Seek To Renegotiate Operational Guidelines With CBN

The Association of Bureaux De Change Operators of Nigeria (ABCON) which was banned from accessing Central Bank of Nigeria’s weekly dollar rationing is ready to renegotiate terms with the  bank to allow it to interact with investors and those involved in Diaspora remittances.

Nigeria’s Diaspora remittance which is estimated at $17.6bn  has become a veritable foreign exchange option that BDCs are clamouring to tap from.

The President of ABCON, Mohammed Aminu Gwadabe, told THE WHISTLER in an interview that the body is ready to renegotiate terms with the CBN to give members an official status as a licenced payout agents for the Diaspora remittances.

The challenge between the CBN and ABCON began when the regulator in 2021 accused BDCs of sharp practices within the industry.

As part of measures to cut the excesses of BDC operators, the apex bank announced the immediate ban of foreign currencies sale to them.

Consequently, many of the 5,500 licenced operators who relied on the  $20,000 weekly intervention went out of business.

One of CBN’s core reasons for the decision was to save the naira which traded at  N410 per dollar officially and N525 per dollar at the parallel market and maintain foreign exchange stability.

“Irrespective of whatever the accusation is, the BDC remains the potent tool of foreign exchange regulation. From 2006 till the time of the suspension in July 20221, the Bureau De Change has been used to regulate the foreign exchange in the market,” Gwadabe told THE WHISTLER.

He added, “As an association, we support any measure in ensuring that there is compliance but when the compliance level is turning to be low, it is good for the CBN to take any measure.

“But however, it shouldn’t be a measure that will throw the baby and the bathwater. My advice is that we can’t continue to imagine what happened yesterday. We have to be proactive and adaptive and retool.

“So, instead of condemning the entire sector that has been effective and efficient for regulation, you want to close it and unfortunately the outcome of that decision has not really helped in closing the exchange rate  gap. It is rather widening the gap.”

According to CBN, BDCs had reneged on an earlier understanding to make marginal gains on FX sale allocations to them by the Bank.

But the ABCON President explained that both parties could explore other options as the country is plagued with forex shortage.

Gwadabe said, “So what do we do? We come to the table and look at other options. Yes, we believe and agreed that there is nowhere in the world where CBN opens its window to licenced Bureau De Change, but you know there are so many currency remittance roles in the financial ecosystem and this is what we are saying.

“We have written and told them that there is a lot of potential in currency remittances. A lot of people now opt for ungoverned exchange rates to do their transactions. They don’t even go through the licensed Bureau De Change or through the banks, because of the lack of convenience.

“So we need to see how we can adapt and retool this by transforming the Bureau De Change to ones that can play the rules of the game, so that there will be liquidity and confidence in the market.

“So why not be a bit flexible and allow the players to be adaptive and retool and then find a means or technology that will make it easier to monitor the performance of the Bureau De Change operators.

“They can introduce a kind of e-invoicing for BDCs to ensure monitoring and compliance. We are willing to align with it.

“Let them look at currency remittance. In other countries, it is the BDCs that are handling it. It is not a big issue and it is something that we can sit together and renegotiate.”

Gwadabe argued that allowing BDCs participate in diaspora remittance will give room for investors and Nigerians to bring in their funds into Nigeria’s economy.