The Central Bank of Nigeria (CBN) has taken steps to tackle Inflation and stabilise the Economy by lifting its suspension on interbank foreign exchange sales to Bureau de Change (BDC) operators nationwide. The Association of Bureau De Change Operators of Nigeria (ABCON) hailed the move. Dr. Aminu Gwadabe, President of the association, expressed optimism about the new directive, emphasising its potential to revive the operations of BDCs while enhancing the nation’s foreign exchange liquidity. According to him, the policy will not only create jobs but also ensure compliance with regulatory requirements and enhance the overall stability of the financial system.
By granting access to the newly introduced Electronic Foreign Exchange Matching System (EFEMS) through banks, the CBN has reaffirmed its commitment to integrating it into the foreign exchange system. This decision underscores the vital role they play in the FX market. By permitting these operators to purchase up to $25,000 weekly from the Nigerian Foreign Exchange Market (NFEM), the central bank aims to ease seasonal Retail demand for foreign exchange, particularly during the holiday period. This temporary arrangement, effective from December 19, 2024, to January 30, 2025, allows them to transact at the prevailing market rate, with a maximum of 1% spread for retail end-users.
Gwadabe urges banks to ensure fairness when implementing this policy.
ABCON’s leadership has urged its members to adhere strictly to the directives, ensuring seamless operations automation and timely returns. Meanwhile, He has called on banks to provide a level playing field to execute this policy. The reintroduction of interbank foreign exchange sales marks a notable policy reform by the central bank. Inflation, one of the nation’s most pressing economic challenges, has been increased by currency instability and limited foreign exchange liquidity. This policy seeks to stabilise the Naira and reduce the rising cost of goods and services by improving access to foreign currency.
Meanwhile, the retail segment, particularly small businesses and individuals have long suffered from constraints that drive reliance on informal markets with unfavourable rates. By allowing BDCs to source foreign currency directly from authorised dealers, the CBN aims to bridge this gap, reduce speculative trading, and promote a more stable exchange rate environment. This policy is expected to affect the country’s economic system. Businesses that depend on imported goods, many of which have struggled due to restricted foreign currency access, stand to benefit.
Compliance and transparency are central to the CBN’s approach.
Improved liquidity will enable these businesses to stabilise supply chains, enhance operational efficiency, and create jobs. The move aligns with efforts to stimulate economic activity and support national growth objectives. However, compliance and transparency are central to the CBN’s approach. BDCs must adhere to strict guidelines, including regular reporting and maintaining pricing caps for retail transactions. These measures aim to ensure fair practices while promoting confidence in the official foreign exchange market. Gwadabe emphasised the importance of these standards, urging members to operate within their offices and prioritise automation.
Furthermore, the timing of this policy coincides with heightened seasonal demand for foreign exchange, a common trend during the festive period. By temporarily authorising BDCs to purchase weekly FX quotas, they aim to prevent undue pressure on the market, ensuring smoother transactions for end-users. The reforms outlined in a circular on November 29, 2024, underscore the central bank’s commitment to reintegrating BDCs into the foreign exchange ecosystem. For the first time in years, BDCs can acquire foreign currency directly from authorised dealers within a regulated monthly limit.
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Beyond addressing immediate challenges, these measures are designed to achieve long-term economic stability. By revitalising the operations of BDCs, the central bank is not only supporting its Monetary Policy objectives but also enhancing the overall functionality of the financial system. As a result, integrating this system into the foreign exchange market also promises to reduce dependence on informal trading networks, which often operate without regulatory oversight. By formalising these transactions, the CBN is laying the foundations for a more reliable and efficient foreign exchange market.