CBN Unveils New Directives for Forex Transactions by BDC Operators

It's not up to a week after the apex governor had a closed-door meeting with President Tinubu in the Presidential Villa on ways to stop the naira from devaluation. After the meeting with the President, Mr. Folashodun Shonubi said that speculators of the naira will not be favoured with the policy coming out shortly.

On Friday last week, the CBN launched an FX price verification portal for importers—the directive states that the 'Form M' is now mandatory for everyone who is intending to bring physical goods into the country. 

While we are not certain of the exact plans the CBN has in place, we believe that more measures are still coming.

After all these, the Central Bank of Nigeria has released new guidelines for operators of Bureau de Change (BDC) in the country by fixing limits on how they trade in the Foreign Exchange Market.

The circular which was released on Friday night by Dr O.S Nnaji, the Director Trade and Exchange Department to the general public and BDCs operators in the country said the goal of such implementation was to improve the efficiency of the forex market and stop the devaluation of the country's local currency which in return will benefit both BDC operators and the general public.

In the circular, the way BDC operators buy and sell was fixed to an allowable limit of -2.5% to +2.5% of the Nigerian Foreign Exchange Market window weighted average rate of the previous day.

The circular reads,

• The spread on buying and selling by BDC Operators shall be within an allowable limit of -2.5% to +2.5% of the Nigerian Foreign Exchange market window weighted average rate of the previous day

• Mandatory rendition by BDC Operators of the statutory periodic reports (daily, weekly, monthly, quarterly and yearly) on the Financial Institution Forex Rendition System (FIFX) which has been upgraded to meet individual Operator’s requirements.

• Operators are to note that with effect from the date of this circular, non-rendition of returns would attract sanctions which may include withdrawal of operating license. Where Operators do not have any transaction within the period, they are- expected to render nil returns. Please be guided accordingly and ensure compliance.

However, Godwin Emefiele the former governor of the Central Bank of Nigeria has raised concern in the past stating that BDCs had become a hub for money laundering and noted that the CBN will deal with anyone found wanting.

His statement,

“The CBN will deal ruthlessly with Nigerian banks who have acted as collaborators with these illegal forex dealers, we will deal with them ruthlessly because they have allowed their banking and payment system infrastructure to facilitate these illegal dealings in foreign exchange.”

• His claim was that BDCs were devaluating the country's economy.

After his tenure, the new leadership is making efforts to strengthen the foreign exchange market and has urged all BDCs to adhere to the new guidelines presented to them. Also, the apex bank did not categorically state whether BDCs will continue the sale of dollars. 

According to the CBN, we have only 5,687 licensed BDCs in the country.