Nigeria’s central bank will refund exchange bureaux that have paid deposits and licence fees which have yet to be approved, it said on Thursday, after announcing this week that it will no longer sell them foreign currency.
The bank said on Tuesday the bureaux had become conduits for graft and illicit flows of money and that it would no longer process or issue new licences for bureau de change operators.
The naira currency hit a record low of 525 per U.S. dollar on the black market following the central bank’s action, part of a series of measures to support the naira, whose depreciation is contributing to galloping inflation.
On the official spot market, the naira continued to trade within the 407 to 412 naira per dollar range at which it has been quoted since last month.
The central bank said it will begin immediately refunding unapproved capital deposits of 35 million naira ($85,158) and licence fees of 1 million naira for exchange bureau operators, from which it receives 500 new applications monthly.
Nigeria has around 5,000 bureau de change operators, up from 74 in 2014. The central bank sold $13.6 billion to the bureaux in 2019, analysts say, at the height of pre-pandemic foreign travel and high oil prices. It sold $5.3 billion last year.
Ayomide Mejabi, emerging markets strategist at JP Morgan, said it was good news that the central bank was shutting one avenue for foreign exchange in a country that operates a multiple exchange rate system.
But the change could limit dollar access to some informal, but legitimate, segments of the economy, he added.
Nigeria has several exchange rates operating in parallel, a system put in place during a 2016 oil price crash when the government was seeking to avoid a large official devaluation.
($1 = 411.00 naira)
– Reuters