BDCs Seek Forex Rate Convergence
The Association of Bureaux De Change Operators of Nigeria (ABCON) has called for an emergency meeting of its members to discuss critical issues in the foreign exchange (forex) market.
Top on the agenda is the convergence of Bureau De Change (BDC) rate with banks’ rate as well as need to discourage prevalence of unregistered forex operators from trading in the market.
Also, to be discussed is the rising bank charges associated with BDCs’ transactions. The meeting, which holds in Lagos on Wednesday, is expected to be attended by over 3,500 Central Bank of Nigeria (CBN)-licenced BDCs and members of ABCON.
President of ABCON, Alhaji Aminu Gwadabe, who disclosed this Tuesday, said negative margins being experienced by BDCs, review of annual licence renewal in view of the number of the BDCs, and approval of additional forex disbursement centres in Port Harcourt, Maduguri, Benin, Ibadan, among others, would also be discussed at the meeting.
According to the ABCON boss, to be discussed also are Company Income Tax (CIT) and Value Added Tax (VAT) payment by BDCs, ABCON members’ statutory payments which include CBN Licence Renewal Fees and Annual Subscription Fees as well as late disbursements of forex at various centres.
He disclosed the challenges faced by BDCs were enormous, saying many forex users now prefer to buy their Business Travel Allowances (BTA), Personal Travel Allowances (PTAs), medical bills and school fees payment abroad through the banks instead of BDCs following the convergence of naira/dollar rates at parallel market and BDCs.
He said the attractive rate at the parallel market segment has triggered a massive influx of demand from forex users running away from the mandatory regulatory documentations sought by BDCs.
He said the BDCs were at a disadvantage, as forex users shunned them for the parallel market where they could buy without documentation.
“Many forex users prefer to buy at the parallel market instead of BDCs because there are no longer rate gaps. They prefer the parallel market where there is no single documentation required. That is why we are calling on the CBN to review the rate band for BDCs,” he said.
Gwadabe said the challenges faced by BDCs, if not checked, would trigger a liquidity crisis that may derail the ongoing recovery of the naira against the dollar.
“We want the CBN to review the BDC rate to ensure that currency speculators do not return to the market. Remember the BDCs buy dollar at N360/$1 from the International Money Transfer Operators (IMTOs),” he added.
He said ABCON members would also find ways to get the CBN to reduce rising bank charges associated with their transactions.
“BDCs are charged N1,000 per N1 million transaction and with each operator paying as much as N67,000 for the N67 million monthly transactions. These charges are too high and our members will be discussing how to get the CBN reduce that burden,” he said.