…operators halt funding dollar accounts at CBN

Most Bureau De Change (BDC) operators across the country have stopped funding their dollar ac-counts with the Central Bank of Nigeria (CBN) as the apex bank’s forex reforms exert maximum pressure on BDCs operations, investigation by New Telegraph has revealed.

The CBN, as part of strategic measures designed to stabilise the naira against the greenback, a few months ago, began direct sale of dollars to banks for onward sale to key segments to ease the scarcity dollars. The apex bank has injected over $7 billion into the forex market within the spate of six months.

Speaking on the development, a BDC operator in Abuja, Mallam Usmah Abdullahi, told New Telegraph that BDC operators’ fortunes have nose-dived drastically.

He said most BDCs have stopped funding their dollar accounts with CBN.

“BDCs operators are not funding their accounts because we are not happy. The CBN is giving us a dollar at N360 and we are selling at N362. If you deduct all the expenses – pay bank charges, pay your cashier and pay for returns, you are left with losses.

“CBN should reduce the official rate it sells dollars to BDCs. The bank sells dollars to commercial banks at N305 to a dollar and sells N360 to BDCs, it doesn’t augur well for our business,” said Abdullahi.

Another operator, who elected to be anonymous, said he has stopped funding its dollar accounts with the apex bank.

“I can’t be bidding at a loss while my bills keep piling up. So, I have to stop funding my account with CBN,” he said.

Similarly, a Lagos-based BDC operator, Mr. Mathew Omoregie, said: “Many BDCs no longer participate in the weekly forex bid sessions because clients are no longer coming forward to buy dollars from us as frequently as they used to do in the past.

“The reason is not just that the CBN is flooding the market with dollars, but it has to do with the fact that it (CBN) is selling dollars at a discount to the banks, thereby making it possible for the banks to sell at the N360/$1 rate that the BDCs buy from the CBN.

“Of course, since we buy at N360/$1, you don’t expect us to sell at the same rate to our clients; otherwise we won’t be in business. So what is happening now is that many of our clients now prefer to buy at a cheaper rate from the banks,” he stated.

He disclosed that BDCs have urged the CBN to review the rates at which it sells forex to BDC operators to enable them to compete with banks, but that the apex bank was yet to grant their request.

Another Lagos-based BDC operator, Mr. Morrison Okoye, revealed that he recently had to ask two of his staff to stop coming to work until business improved.

He said: “Things have been really tough since February this year when the CBN introduced new measures to liberalise the forex market. Apart from the fact that the frequent dollar injections into the market by the CBN have made forex easily available for people who need BTA, PTA and to import goods, it has also made it more difficult for BDCs to compete with banks who are selling forex at a cheaper rate.”

He disclosed that unlike a few months ago when many BDC operators used to quickly sell off the $40,000 they get weekly from the CBN, a few clients were turning up these days to buy dollars.

The same tale of woe emanated from Owerri, the Imo State capital. Former chairman of Owerri BDC operators under the cooperative name, Igwebuike Traders Union, Mr. Anselem Nwagu, told New Telegraph that the CBN’s forex measure is adversely affecting their operations.

BDC operators in Port Harcourt, the Rivers State capital, said they are unhappy over the CBN’s recent forex measures.

According to them, the measures have made it extremely difficult for them to profit from the business.

About 90 per cent of the operators in Port Harcourt carry out their operations beside Hotel Presidential, along Aba Road. Those who spoke to New Telegraph complained of declining business opportunities, which they blamed on CBN’s policy.

Yunusa Girei said that they mainly survive through direct purchase of foreign currencies from customers who either have relations abroad or who work with expatriates who pay them in foreign currencies.

He said: “We are in a tight corner with the way the CBN handles foreign exchange. The official CBN rate has forced some people I know out of business. These are very small players, whose masters struggle to survive.”

President, Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe had, last month, alleged that more than 700 BDC operators had, in recent months, been rendered inactive due to the new structure of the foreign exchange market.

According to him, the BDC business had been badly affected by “uncompetitive rate as the CBN sells dollars to BDCs at higher rate compared to what the regulator sells to commercial banks, yet both institutions target the same market segment and customers.”

Gwadabe explained that BDCs buy dollars from the CBN at N360/$1 and sell to end users at N362/$1 while the regulator sells to commercial banks at N358/$1 and the banks sell to end users at N360/$1.

Reflecting on forex intervention by the apex bank, the CBN governor, Mr. Godwin Emefiele, has repeatedly maintained that the intervention has restored confidence in the economy.

Mr. Isaac Okorafor, the Acting Director, Corporate Communications Department of the CBN, stated that the apex bank would continue to increase liquidity based on genuine demands in the market to enhance forex stability.

He reminded Nigerians that the CBN has kept faith with its resolve to sustain liquidity in the forex market and that the bank had ensured that pressure on the market was removed by its continuous interventions.

https://newtelegraphonline.com/2017/10/cbn-forex-reforms-cripple-bdc-operations/

lalasticlala

Those guys made enough cash during the naira fall..
Let then live with what they have made..

CBN and reforms be like IPOB and their whala...

nawaooo



https://www.youtube.com/watch?v=azFjI2Parho

It is better that CBN restricts....so that it won't be $1=5000 naira by now.

The real problem however is Nigeria's reliance on revenue from selling raw materials. Things like oil, palm oil, cocoa, groundnuts, cotton, etc...because once the price of any of those things goes down, we would end up having to restrict dollars since the revenues are falling. And the prices of all those goodies fall well well.

Better we become a MANUFACTURING economy, rather than wait for oil to rise again, like this APC govt is doing....which means decades of hard work, but the payoff would be very very good. Because we would be in a position where we have a strong currency, and where devaluation makes sense.

K

Ori gbogbo yin buru. When they were buying cheap and selling high we no hear. If dem wan die, make dem die troway. Nigerians don get sense, we trade directly now. You need, I have, we deal. No need for one middleman to shortchange both of us.

BDC operators made lots of money in the past years.

It's one of the best Business you can venture into once you have your lisence.(free money)

But of recent due to the strict measures put in place by CBN, its hard to make gains

Lol. When they were milking us, it augur well fa?

It is d same CBN and govt dat enriched dem earlier dis year. But all dis pumping CBN has been pumping to whom have dey been pumping ? I guess it's tym to enrich d banks too. But how can CBN b selling to banks 305 and banks keep selling at 360? Which kind thievery b dat

Is it 'one corner' or tight corner I am seeing up there?

You dey mind them?

futurism:
Lol. When they were milking us, it augur well fa?

Just look at how much it has cost to defend the naira in 6months, $7b! Then some people will be asking why our forex reserve dropped at the height of oil sale, dollar was selling 160 - 200 naira, imagine how much would have been spent to defend it.

hmm

Why do we need BDC when we have banks?

dre11:

“CBN should reduce the official rate it sells dollars to BDCs. The bank sells dollars to commercial banks at N305 to a dollar and sells N360 to BDCs, it doesn’t augur well for our business,” said Abdullahi.

"Gwadabe explained that BDCs buy dollars from the CBN at N360/$1 and sell to end users at N362/$1 while the regulator sells to commercial banks at N358/$1 and the banks sell to end users at N360/$1."

So who is saying the truth now?

trendytrendz:
Just look at how much it has cost to defend the naira in 6months, $7b! Then some people will be asking why our forex reserve dropped at the height of oil sale, dollar was selling 160 - 200 naira, imagine how much would have been spent to defend it.

Exactly.

Saudi Arabia spent $150 billion just to defend their currency in 2015 alone.

Dividend of oil price falls.

The distortions in the foreign exchange market will continue as far as the CBN continues to promote different exchange rates in the market. Emefiele should go learn what Soludo did to achieve convergence in the exchange rate across the official and parallel markets in his time.

Wailers that do not understand this news will quickly rush to accuse PMB of closing people businesses. And those that understand will not comment or will type "OK"

If I'm made CBN governor, the first thing I will do even before eating, is to abrogate Bureau De Change....these are 98% Northerners making a living in the system and moving stolen dollars. Their relevance to the economy is ZERO. Like other countries they sell dollar to banks only. If a Currency Exchange business wants dollar, they should buy from banks and individuals at their own risk and expense. Like most countries, exchanging currency at a Currency Exchange business will cost you a little more than going to the bank. People still patronize them because they are faster and efficient yet costly. Banks take time and a lot of paper work to submit, some people don't have that time so they go to Currency Exchange businesses. My point is BDE will thrive whether they get dollar from CBN or not if they focus on efficient services. For example, Why should I waste hrs or even days at the bank to buy dollar for 100 bucks when BDE will sell for a little bit more for 120 but will only take few minutes, and they can bring it to me.

What was Buhari thinking when he promised to make 1# equal to 1$. In short, why should we take him and his cabinet serious on anything? But some Nigerians will still vote for him if he decides to run for 2019. I hope for heaven sake APC presents a technocrat and not an old soldier

I've no Idea what to comment...lemme just come and be going.

Stupid cbn sells at 305 to banks and banks sell at 370 to 400 to customers. Isn't that corruption?

Why is no one talking about this?

[quote author=scofieldsimba post=61495515]Those guys made enough cash during the naira fall..
Let then live with what they have made..





or perhaps vomit it.

Incoherent article! One paragraph says the CBN sells to commercial banks at $1=305, another says $1=358. Which do we believe?
Well, it doesn't change the fact that Emirs get $ at 199.50 and islamic pilgrimages get theirs at 238naira.

Sighs.

Trust Nigerians to still complain.

trendytrendz:
Just look at how much it has cost to defend the naira in 6months, $7b! Then some people will be asking why our forex reserve dropped at the height of oil sale, dollar was selling 160 - 200 naira, imagine how much would have been spent to defend it.

your head dey there. That sums it up

Deeldorado:
The distortions in the foreign exchange market will continue as far as the CBN continues to promote different exchange rates in the market. Emefiele should go learn what Soludo did to achieve convergence in the exchange rate across the official and parallel markets in his time.

exactly

Now the banks are the ones feeding fat.

He took power from one monster and gave it to bigger monster. Talk about the dumbest cbn governor ever.