How effective is CBN’s foreign exchange policy on Bureau De Change operators?

After the recent decision by the Central Bank of Nigeria to discontinue foreign exchange sales to Bureau De Change operators, the Nigerian currency, the Naira, has experienced relative stability in the official forex market. However, the Naira has seen a steady depreciation of 12% to 562 Naira to the dollar in the parallel market, raising concerns among stakeholders in the Nigerian economy. Aminu Gwadabe, President of the Association of Bureau De Change Operators of Nigeria, sheds light on the implications of this decision and the outlook for the currency. Gwadabe emphasized the impact of the CBN's decision on their business, highlighting the significant contribution of the Bureau De Change sector to the economy. With a capitalization of about 300 billion Naira and over 40,000 direct employees, the sector plays a crucial role in the foreign exchange market. The discontinuation of foreign exchange sales has led to a loss of expertise and a decrease in business activities for Bureau De Change operators. When discussing the weekly foreign exchange sales before the CBN's decision, Gwadabe mentioned that sales were approximately 100 million dollars. The reduction in supply has affected the availability of foreign exchange in the market, contributing to the depreciation of the Naira in the parallel market. Concerning the outlook for the Naira, Gwadabe expressed pessimism due to the current state of the market. He highlighted the challenges faced by Bureau De Change operators, who are struggling to operate effectively amidst the limited supply of foreign exchange. The parallel market rates have reached record highs, with the Naira depreciating significantly against the dollar. Gwadabe reiterated the importance of engaging with the Central Bank to address the issues faced by Bureau De Change operators. While acknowledging the need for reforms in the sector, he emphasized the importance of creating a more competitive and transparent market to attract foreign investments and improve liquidity. He proposed the establishment of an aspirational window for Bureau De Change transactions to facilitate interactions with international money transfer operators and wholesale importers. By implementing reforms and reducing regulatory barriers, Gwadabe believes that the sector can enhance its operations and contribute to the stability of the foreign exchange market. In response to the potential decline in the number of Bureau De Change operators, Gwadabe expressed readiness for reforms and highlighted the importance of organized corporate governance to streamline operations within the sector. While discussing the outlook for the parallel market rate, Gwadabe acknowledged the interconnectedness of the various segments of the foreign exchange market. He noted the different players in the market and their impact on exchange rates, emphasizing the need for informed decision-making and confidence in the currency. Overall, the interview with Aminu Gwadabe provided valuable insights into the challenges faced by Bureau De Change operators in Nigeria and the implications of the CBN's foreign exchange policy on the currency market. Despite the current difficulties, Gwadabe remains hopeful that with the right reforms and engagement with the Central Bank, the sector can overcome its challenges and contribute positively to the Nigerian economy.