Two months ago, when the Bureau de Change operators in Nigeria really began to feel the impact of the Central Bank’s recent move of the stoppage of dollar sale to the operators, Aminu Gwadabe, President, Association of Bureau de Change Operators of Nigeria, ABCON, cried out that the move would eventually lead to the loss of 30,000 BDC workers in the first quarter of the year. While it has not been that dismal yet in terms of job losses, it has since become a struggle for the operators to do each day’s business.
The operators have been battling to stay afloat since CBN ‘s action has translated to a considerable shrinkage in foreign exchange needed for robust operations.
Abubakar Usmam, former chairman of the Hajj Camp forex exchange market, Murtala Mohammed International Airport, Lagos states the present predicament of the money changers: “We are really feeling the negative impact of no dollars from the CBN as it went a long way for us to meet customers’ demands. Being supported by government was certainly better than being left alone to now seek other means of getting foreign exchange. It is now quite difficult to meet demands and make tangible profit”.
The BDCs certainly had it far better in the past. Their tales of woe began in earnest with the present Godwin Emefiele’s CBN governorship regime which, before eventually stopping supply of dollar to the BDCs, had slashed forex allocation to $15, 000 weekly, from the $50,000 the BDCs got during former CBN Governor Sanusi Lamido’s regime.”During former President Obasanjo’s era, we got as much as $250,000 weekly”, Usman said.
The BDC operators are particularly displeased about the fact that the Emefiele headed CBN had earlier compelled the registered 3000 operators to pay a large sum of N35 million as capital, to be qualified as legal currency changers. “Apart from that, to get the $15,000 earlier under Emefiele’s tenure, we even also had to deposit equivalent sum in naira weekly, ” the Hajj Camp former chairman said.
While Gwadabe says the BDCs cannot stop the CBN’s decision and action, he points out that it was the involvement of the BDCs and their direct sale of dollars that made the convergence of the exchange rates in 2006 achievable. “Contrary to the impression created by the CBN, BDCs are not the problem of the forex market, rather they are the solution to deep rooted problems in the market such as activities of illegal forex operators and the wide gap between official and parallel market exchange rates, ” Gwadabe noted.
On his part, Usman gave a thumbs down to an earlier pronouncement by Emefiele that more resources will now be expended to ensure that the BDCs would meet with no success if they attempt to embrace autonomous sources that violate anti-money laundry laws. “There can be no issue of us being responsible for illegalities. Most of the people into illegalities and laundering connive with some banks. they have to go to the banks to find out how such is possible,” he said.
The former chairman laments that the unprecedented rise in the exchange rate of the dollar has swallowed the operating capital of the operators. He revealed that the BDCs have been surviving mainly by pooling resources.
The rise in dollar exchange rate has consumed our capital
Abubakar Usman, former Chairman of the Hajj Camp Forex Exchange Market, Murtala Mohammed International Airport tells Funsho Balogun in this interview that these are tough times for the Bureau de Change operators struggling to be in business after shrinkage of operating capital
How have the BDCs been getting forex after the CBN has stopped the weekly supply
Since the Central Bank stopped giving us forex, we get what we use in exchange from the customers that trickle here with their $1000, $2000 etc. This forex is what we daily put together to run our exchange business. Those who come here include travellers who need to change currency. This is now the only way we get forex.
Does this translate to reduced scale of business?
without the supply of dollar by the Central Bank, things have not been the same as before and it is now quite difficult to meet demands and make tangible profit. We miss CBN’s forex now because it went a long way in meeting customers’ demands. The CBN under Emefiele had cut down our foreign exchange allocation to $15,000 weekly which was a far cry from what we got in the past. During President Obasanjo’s time the CBN was giving us $ 250,000 weekly. Then Sanusi Lamido came and reduced it to $50,000 weekly for the BDCs. But after Emefiele came in and we were compelled to pay a huge sum of N35 million to remain in business, he slashed the weekly allocation to $15,000. To even get that we had to deposit equal sum. But presently the CBN has stuck to its policy of not giving us any dollar. Actually, we are not happy with the CBN Governor Emefiele at all.
In February, the body of BDCs warned that CBN’s action would lead to the loss of 30,000 jobs. Has the stoppage of sale of dollars to BDCs put such a large number out of business yet?
Nigeria happens to be a big business conscious country and 80 per cent of our people depend on buying foreign things. So, we in the forex business have been struggling to get foreign exchange little by little, but certainly not as before. The best most of us get now is to manage between $10,000 and $15,000 weepkly all sourced from our own efforts. Such sum would have been an addition to the $15,000 we were able to get from the CBN before, which meant bigger business without much stress . Generally, things have worsened with the problem of the sharp increase in dollar exchange rate.
But the BDCs were earlier accused of being involved in orchestrating the unprecedented high exchange rate?
The CBN is responsible for that. The BDCs are only assisting the country and if CBN had more understanding of the sector it should have collaborated with the BDCs to find a way out. The real situation is that you can go to the BDCs to instantly get forex of a few hundreds or thousands of dollars and we can also buy from you. Where else is it so easy to get such forex in the country? Nigeria is a country still doing business on a large scale despite the insecurity challenges. A lot of visitors are still coming in. Are we saying all these people can go to banks for forex? After the banks have closed by 4.pm thousands enter the country by flight and other means and some have to change currency. Without access to foreign exchange when needed through BDCs the markets will suffer.
The CBN Governor did not cooperate with us. He was the former MD of Zenith bank. Many of us use his bank. We could have asked all our people to pull out OF zenith as pay back and he would certainly not be happy about that. But we know it is all a matter of time. Another CBN lGovernor will come and things will change.
when the Bureau de Change business started, operators got no forex from the Central Bank. Why is it not preferable to you to simply revert to your initial independent status and avoid central Bank’s policy uncertainties?
Well, we are back to that state, or else we would be out of business. It is tough but we are managing to do what we can. The dollar buying and selling has been between N314 to N318. And our profit is about 50 kobo. No matter how high we sell the dollar, our profit remains static at that amount on each dollar exchange. So what do you think is best for us? Is it not for the price of dollar to come down?
The rise in dollar exchange rate for naira is simply consuming our capital money. Instead of buying $10,000 for instance at N 1 million, we buy at a much higher price of over N3m, yet, no matter how much we sell the naira, our profit is between 30-50 kobo. With high exchange rate we sell less. The lower it is the better for us as more people will come.
We thank the President for going after all the hypocrites looting our money. These people have not been BDC operators. So there can be no question of the BDCs being responsible for the theft and money laundering etc. Most of the people into these illegalities and laundering connive with banks or even hide such monies or loot in soak away pits, not with BDCs. We have our rules and regulations and anybody coming to us does so to buy or sell. When we finish doing business we also take our money to the banks.
From your end as BDCs, what can you suggest to boost the naira’ value?
The President did the right thing by signing that agreement with China since we export the most from there. The currency exchange agreement is one of the best ways we can devalue the dollar. Once the President approves it and there is bilateral backing the currency can be made available to us for better circulation.