Central Bank of Nigeria Governor, Mr. Godwin Emefiele, yesterday, told the Senate that the bank will not go back on restrictions placed on Bureaux de Change (BDCs) as he described them as waging a relentless war on the Naira. He said that the activities of operators of BDCs were mainly responsible for the dwindling value of the Naira as they embark on rent seeking speculation of the local currency.

He also told the senators that some 2,837 BDC operators were leading the speculations against the Naira in the parallel market, adding that since stoppage of allocations to BDCs, they have been sourcing their dollars from oil companies and other foreign exchange earners.

The session with the senators was a closed-door affair, but those who had knowledge of what was discussed at the meeting told Vanguard that Emefiele said that, “we will not review the restriction on the BDCs, because we have seen that they are the ones waging a huge war against the Naira.”
According to him, the Senators and Nigerians should not worry about the falling value of the Naira currently, adding that the currency would soon stabilize.

He added:“By our records, 45 per cent of our foreign exchange earnings go into importation of food, fuel and fertiliser. With the coming on board of Dangote factories, we are sure that 45 percent will stay with us. That is why we are backing him to complete the projects in record time.”

When asked whether relying on the ability of one man would not lead to disaster, the CBN Governor disclosed that Dangote Group was already a company quoted internationally and that its activities were more than one man business.

He reminded the Senators that Dangote Group was already building a refinery in Lagos, a tomato paste factory and a fertiliser firm, stating that once the companies come on board next year, the nation would be able to save 45 per cent of its foreign exchange on imports.

It will be recalled that the CBN had accused BDCs of buying foreign exchange from the apex bank at N197 and selling at N270. Operators of some of the BDCs were also said to be in an unholy alliance with politicians to defraud the nation of its foreign exchange. At the height of the racket, Bureaux de Change operators were said to be simply collecting the passports of several individuals and using them as evidence of customers who purchased forex from them in making returns to CBN. But with the introduction of the Bank Verification Number, BVN, a good number could no longer do so.

The actions of these operators,’CBN sources said were defeating the purpose of government, which is unwilling to devalue the Naira. The strong value of the local currency intended by government in the interest of the economy and its citizens was not benefitting Nigerians. Operators of Bureaux de Change simply used their privileged positions and access to powers-that-be to rip off Nigerians.

If in the past there were sincere and genuine operators of BDC, the arbitrage opportunity between the official rate and the parallel market rate attracted many persons into the BDC business. According to CBN figures before the apex bank started selling foreign exchange to BDCs, there were only 74 operators in 2005. In the 10 years since CBN started foreign exchange sales to BDCs, the number has grown to 2,837 with 150 applications for licenses every month. CBN records showed that it used to allocate $8.6 billion to BDCs per annum.
Emefiele also assured Senators that the Nigerian economy would bounce back in the next two years. He said though the 2,700 Bureau de Change operators appear to be waging war against the Naira, the bank’s decision to remove them from official funding list of forex will save the national currency.

Senate backs CBN Governor’s policies

Briefing the media after the closed-door meeting with the CBN Governor, Senate Committee chairman on Information, Aliyu Sabi Abdullahi, said that Emefiele gave a comprehensive account of the performance of the economy in the last one year.

His words: “ Emefiele’s presentation began with the current global economic conditions, which have been characterised by external shocks, including the sharp decline in commodity prices, the geographical tensions along important global trading routes and tightening of monetary policy in the United States.

“He drew linkages of these occurrences with the Nigerian economy, especially with respect to the over 70 percent decline in oil prices from about $116 per barrel in June 2014 to about $30 per barrel currently. The governor’s presentation also gave us an insight into the bank’s analysis and understanding of the situation, and therefore, the rationale underlying the countervailing policy actions it has taken over the last couple of months”.

Senator Abdullahi also said the senators raised questions bordering on the health of the banking system, stoppage of sale of foreign exchange to Bureaux de Change and rise in inflation. They were also said to have discussed the fall in foreign exchange reserves, exclusion of some items from access to foreign exchange, and policy coordination between fiscal and monetary authorities.

“Following an exhaustive response by the Governor and his team, the Senate acknowledged that these are indeed difficult times all over the world and not just in Nigeria. The Senate also acknowledged the pains that many people may be facing at this time, especially in light of shortages of foreign exchange for legitimate business.

“But having carefully considered the policies of the CBN, the Senate would like to commend and support these policies because they are mostly geared towards increasing local production, creating jobs, safeguarding our commonwealth and expanding economic opportunities and growth in Nigeria,” Abdullahi said.

Source: Vanguard