Activities at the retail
segment of the official foreign exchange market were grounded, yesterday, as
end users avoided bureaux de change (BDCs), to avoid submitting their Biometric
Verification Number (BVN) for foreign exchange transactions. This, however, resulted
in sharp increase in demand for dollars at the black market, prompting the
naira to depreciate to ₦230 per dollar from ₦225.
Recall
that the Central Bank of Nigeria (CBN) made the BVN a criterion for sale and
purchase of foreign exchange by banks and bureaux de change (BDCs) effective
November 1.
Vanguard
investigation, however, revealed that instead of foreign exchange end users
submitting their BVN to BDCs as mandated by the CBN, most of them moved to the
black market for their foreign exchange needs. This in turn increased demand in
the market, prompting the parallel market exchange rate to rise to ₦230 per
dollar from ₦225 at the close of business on Tuesday.
Confirming
this development to Vanguard, Mr. Harrison Owoh, Chief Executive Officer, H.J
Trust BDC said that “most of the customers were not willing to submit their BVN
due to fear of what it might be used for. This has slowed down sales of
forex by BDCs because we can’t sell without obtaining the BVN.”
An
Abuja-based BDC manager, who spoke to Vanguard on condition of anonymity said
that the problem was severe in Abuja, with BDCs having difficulty selling the
dollars purchased from the CBN, last week.
“As
I am talking to you, most BDCs in Abuja may not take dollars from CBN today
(yesterday) because we have not sold the ones we bought last week. The
customers do not want to submit their BVN for security reasons. They are
patronising the black market, that is why the rate has gone up sharply, and I
can tell you, the rate might rise higher if the situation persists.”
President
of Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu
Gwadabe, however, blamed the situation on lack of adequate awareness on the
part of the CBN before implementing the policy. He said that while ABCON, as a
partner in progress with the CBN supports the use of BVN as criterion for
foreign exchange transactions, the association had, however, called the
attention of the apex bank to the need to delay implementation to allow massive
publicity to create awareness among the populace.
“We
had predicted what is happening now, that in the absence of adequate awareness,
patronage will shift to the black market, leading to depreciation of the Naira
in the market”, he said.
Submitting
BVN not security threat—CBN
Director,
Corporate Communications Department of CBN, Alhaji Ibrahim Muazu wondered why
anybody should be afraid of submitting BVN for transactions, adding that there
was no threat in giving BVN for foreign exchange transactions.
According
to him: “This probably has to do with people with illicit flows, and not for
fear of the BVN itself. And for people with illicit flows, they are
avoiding documentation, the way they avoid the banks.
“To
us, if not for the likely impact on the black market, it is a good development
because it means the foreign exchange market is now demand driven. For example,
if you go to the banks for ‘Form A’ foreign exchange transactions, it requires
more than the BVN.
Submitting
BVN for transactions is not a security threat. The BDCs cannot access the
account details of their customers; they would just have the BVN for reporting
purposes.
“The
BVN is just an identity; the BDC cannot see your account details. It is just
like asking you to submit your passport photograph. And the purpose is to make
sure that people don’t buy foreign exchange above the limit allowed by the law.
There
is a limit of US$4,000 per individual per quarter. If one person buys US$4,000
from one BDC, and another US$4,000 from another BDC, there is no way anybody
can verify it is the same person. All these things are supposed to be
controlled by the BVN. All we want to clarify is that there is no threat in
giving your BVN, it is an identity, in as much as you can give your passport
photograph or even utility bills, as required for operation of dormant account.
“It
is unfortunate if they are going to the black market and the black market does
not have enough supply; but for us if they don’t buy from the CBN, if the CBN
dollar is not sold, it would come back to us or there would be no demand for
dollars next week, and this means we are conserving reserves. The only problem
is the funding source for the black market will be limited and the price is
high. But if I can give my BVN and buy dollars, maybe at ₦200, why should I go
to black market and buy at ₦250? So the genuineness of the transaction is
clear.”
Background
to policy
The
policy of making BVN criterion for foreign exchange transactions should have
taken off August 15, 2015 but was suspended by the CBN following criticism and
warnings on the likely impact on the exchange rate of the Naira, and also to
allow the Nigeria Interbank Settlement System (NIBSS) provide multiple channels
for BDCs to verify BVN submitted by foreign exchange end-users.
The
purpose of the policy, according to a CBN circular issued on October 20, was to
stabilize the forex market, stem the rampant cases of forex leakages and
illicit money transfers from Nigeria.
The
CBN circular
The
circular stated: “All banks and licensed BDCs operating in Nigeria as well as
the general public are, therefore, put on notice that with effect from November
1, 2015, all customers desiring to purchase forex through all available
channels in Nigeria must provide their BVN, which shall be validated by the CBN authorized forex dealer through the Nigerian Interbank Settlement System
platform before the transactions are consummated.
“For
the avoidance of doubt, the CBN shall from November 1, 2015, discontinue sale
of forex to the BDCs that had not availed it the BVN of all its directors. Any
authorised forex dealer that fails to provide the required information in its
returns or provides a wrong BVN would be penalised and this may include the
termination of the forex dealership authorisation.”
Consequently, on Monday,
October 26, NIBSS unveiled a USSD and internet channel for verification of BVN.
According to Mr. Oluseyi Adenmosun, the BVN Project Coordinator for NIBSS, BDC
operators or anybody can dial the short code *565*1# on their phones from any
part of the world for the validation. The USSD code when dialed will pop up a
message asking for the BVN and the date of birth of the BVN holder to confirm
the genuineness of the BVN. The BDC operators also have the option of
using the NIBSS website portal for the validation. The service costs ₦20 per
enquiry
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