Forex: ABCON seeks CBN’s nod to meet retail end demand

RESTORATION
ABCON taking steps to ensure that the business of its members is restored

The Association of Bureaux De Change Operators of Nigeria (ABCON) has solicited the Central Bank of Nigeria (CBN)’s support in ensuring that Bureaux De Change (BDCs) operators continue to sell dollars to retail end forex buyers.
In a notice to its members released at the weekend, ABCON National Executive Council (NEC) appealed to the regulator to revisit the stoppage of dollar sales to BDCs, to bring lasting stability to the naira.

The group disagreed with claims that naira has remained largely stable and converging following the stoppage of dollar allocation to BDCs.
According to ABCON NEC, BDCs remain the most potent tool for CBN to achieve its foreign exchange rate management.

“Our position to CBN is that our members should be considered in whatever mechanism of dollar supply to the end users as it is done in other countries instead of a total blanket removal from the market. We therefore reject the statements claiming that the naira exchange rate has improved following stoppage of dollar sales to BDCs and urge our members to ignore those pronouncements,” it said.

The ABCON NEC said it will continue to take steps that ensure that the business of its members are restored and operators continue their legitimate operations as is done in other parts of the world.

“We the Excos are not sleeping on our responsibility to ensure that our members’ businesses are supported. We therefore call on all our members to continue to ignore statements against the BDCs and continue to give us the necessary supports in ensuring normalcy is restored to the market,” the statement said.
It added that ABCON management will continue in its collaboration, lobbying, media campaign and stakeholders’ engagements to ensure that BDC operators are given the right support and opportunity to thrive as is done in several other economies in the world.

ABCON NEC said the BDC sub-sector is not responsible for naira exchange rate volatility. “The naira exchanges at N416.25/$ at the official market. However, at the parallel market, where majority of forex is sourced by manufacturers and retail end users, the naira exchanges at N587/$, representing over N170 premium between both markets,” the statement said.

ABCON NEC said: “It is on records that the stoppage of FX sales to BDCs did not only create higher demand pressure but also made the value of our national currency useless.

“It is also a reality that majority of Foreign Exchange Retail End- Users can not meet their demands from the the preferred profession

al banks,” the statement said.
It said inclusion of BDCs in dollar supply mechanisms will help reduce the challenges faced by Forex end users and support naira stability.
It said that continued operation of BDCs will help secure over 15,000 direct and indirect jobs provided by the sector and contribute to sustainable economic growth.

The ABCON said the BDC sector was becoming comatose since July 2021 Monetary Policy Committee (MPC) meeting where the CBN suspended weekly dollar interventions to BDCs.

It noted that while BDCs are licensed to offer retail forex sales, across the counter forex transactions, they equally contributed to Nigeria’s economic development.
According to the group, the BDCs are ensuring order and confidence in the forex market, providing data for monetary policy, channels for CBN Intervention in Retail forex market and creation of over 15,000 jobs, among others.

According to ABCON, over N1 trillion annual transaction volume by the BDCs sector is under threat while huge capital investment in the sector is becoming redundant, gradually being eroded and winding up.

It, herefore, advised that just like the apex bank de-risked the agricultural sector, making it easier for agriculturalists to access cheaper loans at single digit from banks, the CBN can also de-risk the BDCs operations to be able to receive diaspora remittances through the International Money Supply Operators (IMTOs) and deepen foreign capital flows to the economy.

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