ABCON: Unorthodox FX policy widens exchange rate gap

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 local currency across all markets. This according to him created huge premium between official and parallel market rates.

Gwadabe, who spoke in a chat with financial journalists in Lagos, explained that with the official market rate now at N430 to a dollar and parallel market rate now at N730 per dollar, a huge rate gap of N300 to a dollar now exists in the markets.

For him, the selling of forex earnings at a fixed rate of N430 to a dollar while open market rate is N730 per dolar is unorthodox practice that lacks credibility and transparency.

“That singular act encourages rent seeking, currency substitution that continues to hurt real sector operators and the overall economy,” he said.

He recalled that when the apex bank decided to suspend sales of forex to Bureau De Change (BDCs), in July 2021, the open market rate was about N501 to a dollar.

Gwadabe, said the small retail exchange institutions – BDCs- remain at the centre of CBN’s exchange rate policies implementation, hence the need for the regulator and public to continuously support BDCs’ roles in exchange rate stability.

This, he said 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 stated.

He said that the CBN Governor, Godwin Emefiele had tried to introduce many 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.

While responding to a question on where the BDCs are sourcing forex, he said though some BDCs are lucky to be operating at the international airport and other off-table transactions, majority of them are out of business due to lack or total absence of alternative sources.