Nigeria: Clamour for improved disbursement of $21bn remittances

*Central Bank of Nigeria.

*Central Bank of Nigeria.

19 September 2016, Lagos — In an apparent bid to enhance the supply of foreign exchange to the bureau de change BDC segment of the of the foreign exchange market, the Central Bank of Nigeria (CBN) last month directed that banks should sell $50,000 from proceeds of international money transfers ( IMT) to the 3000 BDCs in the country.

The directive was aimed at addressing the free fall of the naira in the parallel segment of the foreign exchange (forex) market. The directive was also based on the recognition of the role of   BDCs in achieving exchange rate stability and making forex available to the retail end of the market.

The objective of the directive is however yet to materialize as the naira has continued to depreciate against the dollar in the parallel market, closing at N420 per dollar last week owing to increased scarcity of the greenback.

BDC operators, however, suggest that the CBN should consider the option of engaging a reputable independent distributor to disburse remittance related dollars, adding that recent development in the forex market  outsourcing the disbursement of remittances, adding that this   would strengthen the foreign exchange market.

According to   President, Association of Bureau De Change Operators of Nigeria (ABCON) Alhaji Aminu Gwadabe, only 10 percent of BDCs from the Lagos market have so far accessed dollar from banks since the CBN gave the directive nearly a month ago.

“The proceeds of the international money transfer funds are not CBN money. It is not from the foreign reserves of the CBN. This is money that Nigerians in Diaspora, are injecting into the economy. Before this money came through unofficial means, some sending through hands, and at the end of the day, the beneficiary will not even get the money. And in other countries, the Diaspora funds are strictly for BDCs,” Gwadabe explained.

Gwadabe called on the CBN to outsource the dollar distribution role to independent distributor since the banks have failed in their assigned role. The banks that are so far involved in the dollar sales to BDCs include FirstBank, Ecobank Nigeria, Fidelity Bank, United Bank for Africa and Unity Bank. Others are Diamond Bank, Zenith Bank and Stanbic IBTC Bank.

Gwadabe disclosed that BDCs in Port Harcourt, Kano, Abuja, Onitsha, Maiduguri, Benin, and Enugu are yet to get a single dollar from these banks. The ABCON chief said that the banks are also selling dollar far above the interbank rate.

The banks, he added, are supposed to sell to the BDCs on the same day within the week, but have failed to do so. “Instead of staggering the payment, the banks should sell to the BDCs on the same weekday, so that the impact will be felt in the market,” he said. “Our members across the country have funded their accounts but the banks are not selling to them.

The BDCs that met the CBN’s policy guidelines on the disbursement and cleared by the banks have still not received a dime from the banks,” he added. “I think the banks are compromising the policy and CBN’s directive on the matter. And like I said earlier; since the banks are not co-operating, I expect the CBN to take that role from them and assign it to a reputable independent distributor,” he advised. CBN Acting Director, Trade & Exchange, W.D. Gotring, had directed through a circular to authorised dealers that all agents to approved IMTOs sell $50,000 weekly foreign currency accruing from inward money remittances to licensed BDCs. The directive was meant to ensure

CBN Acting Director, Trade & Exchange, W.D. Gotring, had directed through a circular to authorised dealers that all agents to approved IMTOs sell $50,000 weekly foreign currency accruing from inward money remittances to licensed BDCs.

The directive was meant to ensure the stability of the exchange rate and encourage participation of critical stakeholders in the foreign exchange market. Gotring, in a circular to authorised dealers titled: Re: Transactions in ‘Free Funds’ by Authorised Dealers, also accused the banks of buying and selling forex without following stipulated guidelines.

“The CBN has noticed that some Authorised Dealers have continued to buy and sell foreign exchange referred to as ‘free funds’ despite the provision of the circular of March 4, 2004, on the subject,” he said.

He reiterated that as provided in the laws and regulations governing dealings in forex, authorised dealers shall not sell forex without appropriate documentation and disclosure to the regulatory authorities irrespective of the source of the funds.

*Babajide Komolafe – Vanguard

About the Author