CBN discontinues sale of forex to Bureau De Change operators

The Central Bank of Nigeria (CBN) has made a significant decision to discontinue the sale of foreign exchange to Bureau De Change (BDC) operators in the country. Governor Godwin Emefiele expressed disappointment and concern over the fact that BDC operators, who were initially established to serve retail users needing $5,000 or less, have deviated from their original purpose. Instead, they have transformed into wholesale dealers engaging in illegal forex transactions amounting to millions of dollars per transaction. Governor Emefiele emphasized that Nigeria is unique in directly selling dollars to BDC operators, a system that has not been reciprocated effectively by the operators to maintain price stability in the market. Emefiele highlighted the alarming trend of rent-seeking behavior among BDC operators, with the number of operators skyrocketing from 74 in 2005 to almost 5,500 today. The CBN has been inundated with new BDC license applications monthly, reflecting a concerning trend in the sector. He pointed out several negative outcomes stemming from this behavior, including the dollarization of the economy, undermining of monetary policy, and fraudulent activities such as multiple procurement of foreign exchange from the central bank. The governor also exposed the involvement of international organizations, embassies, and development finance institutions in circumventing foreign exchange laws through illegal channels. He asserted that the CBN will take stringent action against Nigerian banks complicit in these illicit deals and report foreign organizations to their regulators. Emefiele emphasized the unsustainable burden placed on the CBN's limited foreign exchange reserves by the continuous sale of $20,000 to over 5,500 BDCs per week, equating to approximately $110 million weekly and $5.72 billion annually. This practice not only drains scarce resources but also serves as a conduit for illicit financial flows and corrupt activities. In response to these challenges, the CBN has decided to halt forex sales to BDC operators, signaling a shift towards a more transparent and regulated foreign exchange market in Nigeria. Emefiele assured that the central bank will pursue all BDCs involved in illicit financial activities and ensure strict enforcement of regulations to safeguard the integrity of the financial system. The announcement comes at a critical juncture for Nigeria, as the government aims to curb corruption and foster a conducive environment for sustainable economic growth. The decision to cease forex sales to BDC operators reflects the CBN's commitment to upholding financial integrity and combating illicit financial activities in the country's foreign exchange market.