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BUSINESS & ECONOMY

CBN Sold $5.7bn To BDCs Yearly Despite Depleting Foreign Reserves

THE INSIDER: CBN Sold $5.7bn To BDCs Yearly Despite Depleting Foreign Reserves

The Governor of the Central Bank of Nigeria, Godwin Emefiele, at the end of the monetary policy committee meeting held on Tuesday in Abuja, announced the decision of the apex bank to halt the sale of foreign exchange to Bureaux De Change (BDCs) operators.

BDC operators are registered businesses authorized by the CBN to transact small-scale FX businesses in Nigeria on a stand-alone basis.

According to the CBN chief, the sale of foreign exchange was halted due to what he described as the BDC operators’ involvement in illegal financial flows and money laundering in Nigeria.

He stated that there was evidence showing that prevailing owners of several BDCs were the same promoters who procure multiple FX from the Central Bank.

Emefiele stated that commercial banks have been directed to create a dedicated desk to serve customers.

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$5.72bn YEARLY FOREX ALLOCATION TO BDCs

According to TheCable, a top insider at the apex bank on Tuesday stated that the weekly allocations to each licensed BDC operator was at about $20,000. Presently, there are 5,500 BDC operators in the country, this number of operators places the yearly forex allocation by the CBN to BDCs at $5.72 billion.

“Commercial banks come with bids of $1.3 billion fortnightly, and CBN cannot provide more than $250 million,” the source said.

The top insider also noted that 500 entry appliations are made monthly.

FX SCARCITY

The source also stated that due to the limited forex the CBN may have difficulty meeting the requests of banks to serve all customers as mandated.

“They want to meet as much demand as possible for medicals and school fees,” the source added.

“NNPC has not remitted one dollar since the middle of April. They say they spent everything on subsidy.”

Nigeria’s foreign reserves has slumped by $2.33 billion in 2021.

The country’s external reserves plunged from $35.64 billion in January 2021 to $33.32 billion as of July 26.

The World Bank announced in May that Nigeria’s diaspora remittance inflow fell by 27.7 percent in last year– forcing Sub-Saharan Africa (SSA) remittances down by 12.5 percent.

DISCONTINUATION OF FX SALE TO BDCs. HISTORY REPEATING ITSELF?

The CBN had in 2016, accused the BDCs of “gradual dollarisation of the Nigerian economy”.

“In particular, we have noted with grave concern that Bureau de Change (BDC) operators have abandoned the original objective of their establishment, which was to serve retail end users who need US$5,000 or less,” CBN had said.

About Author

Victor Okeh is a graduate of Economics from Lagos State University. He is versatile in reporting business and economy, politics and finance, and entrepreneurship articles. He can be reached via – [email protected]

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