700 BDCs inactive due to low forex patronage - ABCON
More than 700 Bureau De Change (BDC) operators have in recent months been rendered inactive in the Central Bank of Nigeria (CBN) Forex Window, putting the sustainability of their businesses under serious threat, the Association of Bureaux De Change Operators of Nigeria (ABCON) has confirmed.
Confirming the development at the weekend, the President of ABCON, Alhaji Aminu Gwadabe, said that BDC business has been badly affected by uncompetitive rate as the CBN sells dollars to BDCs at higher rates compared to what the regulator sells to commercial banks, yet both institutions target the same market segment and customers.
The BDCs, he said, buy dollar from the CBN at N360/$1 and sell to end-users at N362/$1 while the regulator sells to commercial banks at N358/$1 and the banks sell to end-users at N360/$1.
The CBN’s approved list showed that 3,389 BDC operators have been licensed to carry out the business and are expected to get $40,000 allocations weekly from the CBN Forex Window. The apex bank disburses about $135.5 million to the 3,389 registered BDCs on a weekly basis to sell to forex endusers. The funds are needed for settling demands for Personal Travel Allowances (PTAs), Business Travel Allowances (BTAs), medical needs and school fees payment abroad.
Gwadabe described the buying rate for the BDCs as uncompetitive and a big disincentive for many forex users to patronize the operators. He said the banks and the BDCs operate and service the same market segment, and should get dollars at the same rate to enable both institutions compete favourably.
According to the ABCON boss, the banks enjoy a large customer base with the customers being able to carry out their transactions by having their accounts debited to cover the cost of purchase. He said such convenience plus a lower rate put the banks at an advantaged position to attract more customers than BDCs.
He lamented that BDCs are not only buying at exorbitant rates, but also sell at a rate higher than that of the banks hence, creating low patronage for the operators.
Gwadabe advised the CBN to take urgent steps to review the rate at which the dollar is sold to the BDCs as such would boost ongoing recovery of the naira against dollar. The naira has remained at N368/$1 at the parallel market in the last one week, a major improvement from N520/$1 it exchanged last February. He said the success recorded by the CBN in stabilizing the naira was largely contributed by the BDCs which remain backbone of the retail forex segment of the economy.
“The CBN should be proactive enough to quickly review the BDC buying rate to ensure effective competition among all the stakeholders. There is no need to give the banks undue advantage over the BDCs as is currently the case based on the level of disparity seen in the dollar buying rate by both sectors. Nothing stops the CBN from ensuring that both the banks and BDCs buy dollars at same rate,” he emphasised.
Gwadabe said the rate challenge faced by BDCs, if not checked, would trigger a liquidity crisis that may derail the ongoing recovery of the naira against the dollar. He said the BDCs will continue to support CBN’s determination to achieve exchange rate stability, and strengthen the value of the local currency against the dollar.
He said downward review of the BDCs rate is critical at present, as it will keep operators afloat to meet increasing forex demand at the retail end of the market. A senior lecturer in the department of History and International Relations at the Federal University, Lokoja, Dr Anthony Ali, has urged the federal government to revamp the transportation business on the Lower Niger River to complement other modes of transport in the country.
Speaking at the 2017 annual lecture of the University of Jos Alumni Association, Kogi State chapter held in Lokoja at the weekend, Dr Ali, a guest lecturer maintained that if the Federal Government develops water transport in the lower Niger River, it would serve help in decongesting heavy traffic on the road and minimise the high rate of accidents involving articulated vehicles on Nigerian roads.
The don, whose delivery centred on the topic, “Reposition Transportation Business on the Lower Niger River,” said there was an urgent need for a landward connection to the inland river ports of Lokoja, Onitsha and Warri to decongest the Lagos Sea Ports of Apapa and Tin Can Island.
He noted that reviving transportation on the lower Niger River as it was in the hey days of the Europeans’ water traffic would facilitate the conveyance of bulky goods such as iron and steel products, cement, marble, coal, forest products and petroleum products amongst others.
Dr Ali enjoined the federal and state governments as well as private entrepreneurs to invest on transportation business on the Lower Niger River to boost the domestic economy.