The Association of Bureaux De Change Operators of Nigeria (ABCON) says it has developed a roadmap to save the naira from further decline and enhance exchange rate stability.
This is contained in a statement by ABCON at the end of its National Executive Council meeting held in Lagos, where it unveiled strategies for save the local currency, bridge the exchange rate gaps and curb volatility in the forex market.
The News Agency of Nigeria (NAN) reports that the statement was signed by the ABCON’s President, Alhaji Aminu Gwadabe on Thursday in Lagos.
Gwadabe said there was an urgent need to enhance dollar liquidity in the market and ensure stability of prices in the economy.
According to him, following this route will save the local currency and economy from the impact of election spending that has kept inflation at double digits for a very long time.
The ABCON boss said that the depreciation of the naira against global currencies was due to pressure from rising dollar demand without sufficient liquidity to meet the demands from retail end users, manufacturers and other key players in the economy.
“The naira has consistently come under serious pressures due to dollar scarcity making it difficult for forex end users, manufacturers and key industry players to access dollar needed to meet their needs.
“Under my leadership, ABCON will continue to encourage our members to play the vital role of closing the exchange rate gaps in the market and reducing widening premium between the parallel market and the official window,” Gwadabe said.
The ABCON boss called for the creation of BDCs’ Autonomous Foreign Exchange Trading Window (BAFEX) with determined maximum daily limit for legible BDCs to access dollars from banks, autonomous market and Diaspora forex window at the prevailing market prices.
He urged regulatory authorities with oversight function on BDCs for the enhancement of existing BDCs’ automation portals to file transaction returns on CBN/ABCON/NFIU/NIBSS portals for effective regulatory monitoring and supervisions.
Gwadabe also sought for the creation of an automation portal to encourage registration of undocumented and unlicensed operators for effective monitoring, identification and tracking of their transactions.
According to him, the reluctance of the Central Bank of Nigeria (CBN) to open new windows through which foreign exchange can be attracted to the economy remains a key factor in the continued fall of the naira.
He said that the lack of accent to BDCs demand that it be included in the remittance inflow channel to allow Nigerians in Diaspora remit funds to Nigeria through the BDCs under the CBN’s guidance has affected the volume of dollar inflows to the economy.
According to him, the World Bank’s latest Migration and Development Brief showed that 630 billion dollars was attracted to low- and middle-income countries (LMICs) in 2021, with Sub-Saharan Africa attracting 49 billion dollars.
He said Nigeria’s contribution to the remittances fund will rise when BDCs are allowed to receive funds into the economy.
He said the officially recorded remittance flows to low- and middle-income countries are expected to increase by 4.2 per cent this year to reach 656.5 billion dollars and Nigeria should take immediate steps to be part of the booming remittance market, to boost dollar inflows and stabilise the naira.
Gwadabe said the BDCs are to perform this role through contactless and digitised channels that make collections easy and seamless.
He said there is urgent need to review the guidelines on BDC’s scope of operations to include participation in payment space, such as agency banking, Point of Sale (PoS) services, inbound and outbound forex transfers, ATM Forex services, to reflect global business model practice.
He opined that the BDCs should be allowed to access dollars or Diaspora remittances through the autonomous forex windows like allowing operators to receive IMTOs proceeds, carrying out online dollar operations and Point of Sale (PoS) Agency, among others.
Gwadabe said that now is the time to break the current industry monopoly that puts the remittances market in the hands of few players depriving others from tapping into the plan.
The ABCON boss also called for the establishment of training institutes to enhance capacity and infrastructure in the industry and broaden players’ business scope with cash-back incentives for those that patronise BDCs.
This is while also implementing a less cumbersome and complex documentation requirements for end users.
“The BDCs should be able to operate a network of digital solutions for Personal Travel Allowance, PTA, and Business Travel Allowance, BTA.
“This would reduce overheads, and improve profitability. Some BDCs might still consider working closer with commercial banks.
“ABCON can also be recognised as self-regulatory organisation to enable it operate effectively and sanction erring members,” Gwadabe said.
Gwadabe said that ABCON resolved to align with the policy thrust of the apex bank and ensure that its members play their roles professionally and strategically in the interest of the market and economy.
According to him, de-marketing of BDCs by regulators and security agencies is not good for the stability of the market, rather the strength of over 4,500 operators can be harnessed to bring forex closer to the retail end users and strengthen liquidity in the market.
He said that ABCON has developed multiple applications for BDCs’ transformation from being CBN cash dispensers to globally competitive entities with capacity to attract foreign capital flows to the economy.
“We support any measures that would lead to compliance with the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT).
“We support CBN’s exchange rate stability policies and urge security agencies to punish any BDC operator breaching corporate governance and compliance guidelines.
“ It is our sincere belief that BDCs need to be integrated back officially to ensure their continuous potent role in exchange rate stability management,” Gwadabe said.
The ABCON boss said that the recognition of the role of BDCs in Nigeria’s financial sector remains the first step to building a sustainable and viable forex market that is in tandem with international best practices.
Gwadabe said that the Naira exchanged for N596 to a dollar at the parallel market, while it exchanged at N415.83 to a dollar at the official market, creating a rate gap of N180.17 to a dollar. (NAN)
