By Chisaa Okoye (Business reporter)
President of the Association of the Bureau De Change operators of Nigeria (ABCON), Aminu Gwadabe has said that the unorthodox foreign exchange policy of the Central Bank of Nigeria (CBN) has impacted on the stability of the naira across all markets and created a huge premium between official and parallel market rates.
Gwadabe lamented that with the official market rate now at N430/$ and parallel market rate now at N730/$, a huge rate gap of N300/$ now exists in the markets.
He noted that the selling of forex earnings at a fixed rate of N430/$ while open market rate is N730/$ is an unorthodox practice that lacks credibility and transparency, adding “that singular act encourages rent-seeking, currency substitution that continues to hurt real sector operators and the overall economy.”
According to Gwadabe, in July 2021, when the CBN suspended sales of forex to Bureau De Change (BDCs), the open market rate was about N501/$.
He pointed out that over a year after, the naira to the dollar has depreciated significantly, with a lot of Nigerians not meeting their invisible transaction needs and the CBN is not showing much commitment to meeting those needs.
Gwadabe noted that BDCs -the small retail exchange institutions remain at the centre of CBN’s exchange rate policies implementation, thus the need for the apex regulator and the public to continuously support their roles in exchange rate stability.
Thr ABCON President said this can be achieved through increased automation of their processes and providing more channels of transactions for sustainable price equilibrium while eradicating rent-seeking, currency substitution and speculation.
“I am very confident that Nigeria will in not too distant future appreciate a stable exchange rate and availability of forex in the local economy as the right people for government policies’ implementation get such responsibility,” he stressed.
Furthermore, Gwadabe noted that the CBN Governor, Godwin Emefiele, had tried to introduce sundry policies beyond conventional money supply that are not in line with market realities.
According to him, the Naira-4-Dollar scheme of N5 bonus for every $1 diaspora remittances as well as the N65 rebate for every dollar of non-oil export proceeds and other incentives are commendable, but require total overhaul with stakeholders’ engagement.
He expressed concerns that the naira will continue to suffer losses in exchange for the greenbacks, except urgent steps are taking by the CBN to strengthen the naira.
“The question on the lips of everyone is that are the banks not having the allocation for invisible transactions?”, he rhetorically asked.
While responding to a question on where the BDCs are sourcing forex, Gwadabe said though some BDCs are lucky to be operating at the international airport and other off-table transactions, the majority of them are out of business due to lack or total absence of alternative sources.