‘CBN should consider special exchange rate for foreign investors’
The president, Association of Bureau de Change (ABCON), Alhaji Aminu Gwadabe, speaks on the new policy of the Central Bank of Nigeria (CBN), to address the skyrocketing exchange rates in Nigeria and other issues in the nation’s forex market.
You forecasted a positive foreign exchange environment for 2017. How did you come about this forecast, given the economic recession in the country?
Many parameters gave that indication. One of the things that determine the value of the currency is the buffers and towards the end of 2016, we began to see the prices of crude oil going up even above the benchmark of $42 per barrel to about $52 per barrel. This development translates to more savings. We were making about $14 million daily on 1.8 million barrel output.
The peace move that started last year in the Niger Delta is also another factor. So it is only a question of time for the CBN to look at the savings they have made and use it to cushion liquidity in the market.
A lot of International Money Transfer Operators are going to be registered. Some have been registered and are having challenges inflowing the money but they have put their logistic in place to start very soon.
You would recall that some analysts predicted that the dollar would hit N700 before December 2016, but these indices made sure that even at the end of January, the price has remained stable.
There has been series of meetings between BDC operators and the CBN.What is the intent of these meetings?
Many parameters gave that indication. One of the things that determine the value of the currency is the buffers and towards the end of 2016, we began to see the prices of crude oil going up even above the benchmark of $42 per barrel to about $52 per barrel. This development translates to more savings. We were making about $14 million daily on 1.8 million barrel output will exit at the BDC rate. This will generate huge liquidity. They are waiting for this adjustment from interbank to the BDC rate and billions of dollars will start coming in.
What is your take on the increased agitation for the review of foreign exchange restriction placed on 41 items imported into Nigeria?
Every policy is a journey not an event. As you move along, there would be the need for modification. The positives from the banned clearly outwit the negative. As we speak, the CBN programme on the production of rice has produced about 88, 000 millionaires. These people are exporting rice to Niger and Chad republics from Zamfara, Kebbi and Kano states. The developed countries we strive to emulate made a lot of sacrifices.
Do you support the proposed use of naira as a trading currency in West Africa?
The strength of the dollar is because of its acceptability in all the economies of the world. If you go to Benin Republic, they accept the naira, same for Ghana, Chad, Niger, Cameroon and Sudan. We should push for the acceptability across the region. We have the strength to make it happen.
The officials of Department of State Services recently arrested some parallel market operators for selling foreign currencies above the official rates. How would you react to this development?
To be fair to the regulators, they had stakeholders’ engagement with us before the DSS began their raids. They enlightened us on the implications of hawking hard currency on the street. As a registered BDCs, we re-affirm that any BDCs that hawks, as far as we are concerned, is not our member. If he or she is a member, the law should take its course because it is not allowed. The intention is not to take away business from people but to restore sanity in the system.
What exactly should people who want to locate genuine BDCs look out for?
The list the CBN released has the address of those BDCs included. We are coming out with a platform that will capture the entire BDCs. So far, over 2,000 BDCs have registered online on that platform. It will offer the name and geographical location. The consultants have reached advanced stage with the design.
What do you think is best to narrow the gap between the official and the parallel market rate?
The whole thing boils down to liquidity. Daily in Lagos alone, we have about 8,000 travellers. And what the BDCs can supply in a week is 5000. If you take the average of 20 million per week, the proceeds from IMTOs, if you divide by 4,000 people, you are just looking at 5,000 people, that is, if you will do only PTAs and BTAs. If you will serve those 8000 travellers in Lagos alone, per week, you will be talking about $40,000. What is happening is that, speculators are undermining every policy of government because they want to push the price to N700.