The Association of Bureaux de Change Operators of Nigeria (ABCON) has asked the Central Bank of Nigeria (CBN) to make its members pay agents for diaspora remittances.
Aminu Gwadabe, president of ABCON, made the call during the association’s annual meeting which held virtually, on Wednesday.
The meeting attended by representatives of CBN, National Financial Intelligence Unit (NFIU), among other stakeholders, was organised to shed light on key opportunities and challenges faced by the BDCs sub-sector.
Nigeria’s foreign exchange (FX) earnings suffered a sharp decline following the impact of COVID-19.
This has forced the apex bank to look for alternative sources to boost the nation’s FX earnings through diaspora remittances.
In November 2020, CBN announced that beneficiaries of diaspora remittances through the international monetary transfer operators (IMTO) will have such inflows in foreign currency (US dollar) through the designated bank of their choice.
In another major FX inflow drive, the CBN introduced a “Naira 4 Dollar Scheme” where recipients of diaspora remittances through CBN-licensed IMTOs are paid N5 for every $1 received as remittance inflow.
Gwadabe said making BDC operators pay agents for diaspora remittances will boost liquidity.
The ABCON president said the CBN recorded success with the investors and exporters (I&E) window, which is the market trading segment for investors, exporters and end users that allows for FX trades to be made at market determined exchange rate.
He said such initiative has boosted foreign remittances, adding that making BDC operators diaspora remittances pay agents will improve the country’s forex condition.
“ABCON suggests to the CBN to make BDCs diaspora remittances pay agents. The CBN introduced the investors and exporters (I&E) window which allows foreign investors to freely bring their funds into the economy at a rate of their choice,” he said.
“Similar plan was implemented by the CBN in 2016/2017 and the impact was massive in boosting foreign capital flows to the economy and deepening exchange market liquidity.
“Therefore, ABCON suggests that the CBN allows investors and diaspora remittances senders to freely interact with the BDCs bid and offer rates and make the BDCs pay out agents for remittances.
“Also the huge gaps between the fixed exchange rates and the flexible exchange rates in the market serve as an incentive for arbitrage and use of unlicensed channels for huge diaspora inflows. This gap should be bridged to discourage those profiting from it.”
Gwadabe said that the licenced BDCs sub sector commands N1 trillion annual turnover in the economy.
He identified challenges before BDCs to include low level formalisation, poor compliance to regulation, complex documentation requirement, and inhibitive regulatory policies.
Others mentioned by the association’s president are poor public perception, lower margins and generalization of criminalization.
He added that there is urgent need for increased boarder checks and controls to curb unlawful cash evacuations from the country.
In his remarks, Williams Kanya, a representative of the CBN, urged BDC operators
to comply with regulations and make regulatory returns.