BDCs in fresh move to ‘force’ rate convergence
Read riot act to errant members
The directors of over 3,000 Bureaux De Change (BDCs) said they are now resolved to fully align with regulator to achieve the elusive rates’ convergence, at its strategic meeting today, in Lagos.
The meeting, which is expected to come out with strategic decisions on ways to force down dollar rates and narrow the gaps between official and parallel market rates, became necessary following last week’s sudden depreciation of the naira against dollar, which they said was against the interest of their operations and economy.
The naira closed last Friday at N405 to the dollar in the parallel market, after stabilising at N380 to dollar the previous week.
President, Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the meeting with theme: “Role of BDCs in Price Stability- Realities and Compliance”, will be used to warn erring BDC directors on the consequences of violating operating guidelines.
He said the BDCs will continue to support the exchange rate stability objective of the Central Bank of Nigeria (CBN) and also ensure that official and parallel market rate convergence is achieved.
“We want BDC directors to know the gains of price stability, rate harmonisation and regulatory compliance. Operators with infractions will face penalties. We did it in 2006 when the BDC window was first opened. We helped the CBN to narrow the huge gap between official and parallel market rates. We are ready to do it again,” he said.
Gwadade pointed out that BDCs helped the CBN to narrow the current exchange rate gap from N520 to present rate, and will continue to achieve better results as the CBN continues to fund BDCs with increased dollar allocations.
“We are ready to partner with the CBN to ensure there is rate convergence. We want to make the market transparent, accountable and secure for the economy, investors and Nigerians in Diaspora so that more dollars will be attracted into the economy to strengthen the local currency,” he said.
The ABCON chief, who said that BDC directors are the owners of the business, and should understand that they carry corporate governance burden, reiterated that they directly face sanctions when their operations run contrary to guidelines.
“We want the BDC directors to fully take charge of their businesses, because they will be punished if anything goes wrong. We also want the public to know that BDCs are not criminals, but remain critical partner of the CBN in ensuring that price and exchange rate stability are achieved,” he said.
The ABCON boss said that BDCs’ capital is eroded anytime exchange rates go up, and naira is depreciated. “We suffer financial losses anytime the naira depreciates. We want a better and harmonised exchange rate,” he said.
He praised the CBN for giving each BDC $20,000 last week, adding that the funds will help to further strengthen the naira against the dollar. “We expect that the $20,000 given to us will go a long way to douse the tension in the market even as we urge the CBN to continue to boost liquidity in the market,” he said.
He also urged the CBN to continue to take steps that would help bring more foreign investors to the economy.
Gwadabe said government should invest more in infrastructure because investment follows infrastructure. “If there is infrastructure, investors will troop to Nigeria and there will be more dollars. Immediate investment in infrastructure and continued diversification of the economy away from oil will help to improve the state of the naira and the economy,” he said.
Gwadabe said ABCON has a zero tolerance for non-compliance with regulatory requirement and unethical conduct amongst its members. The group, he said, created the office of Compliance Officer at its National Secretariat and in all its zonal offices and also provided vehicles for the compliance officers to regularly visit BDCs under their jurisdictions.
“BDCs are able to do more business when the exchange rate is stable and relatively close to the official exchange rate and so, will do everything within its powers to support CBN’s drive for exchange rate stability,” he said.
Gwadabe assures the CBN and other stakeholders that the BDC industry is duty-bound to operate within the ambit of the law and would continue to promote national interest and economic development.