Bureaux De Change May Sack 30,000 Workers

Alhaji Aminu Gwadabe, President, Association of Bureau De Change Operators of Nigeria (ABCON) Image credits: saharareporters.com

No fewer than 30,000 bureaux de change (BDC) workers would be sacked within the first quarter of this year. About 200,000 workers are engaged in the sector.

The Nation report continues:

The President, Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, who made this known yesterday, said the planned downsizing followed the continued loss of business by operators after the Central Bank of Nigeria’s (CBN) stoppage of weekly dollar sales to body.

The ABCON boss listed those to be affected as directors, auditors, operations managers and compliance officers, as well as chief executives.

The CBN Governor, Godwin Emefiele had announced a new foreign exchange policy which included the stoppage of weekly dollar sales to BDCs.  He ordered the apex bank to henceforth discontinue sales of foreign exchange to BDCs.

“Operators in this segment of the market would now need to source their foreign exchange from autonomous sources. They must however, note that the CBN would deploy more resources to monitoring these sources to ensure that no operator is in violation of our anti-money laundering laws,” Emefiele said.

But Gwadabe said: “As law abiding citizens and partners in progress with the CBN, we respect the decision of the apex bank as the regulator of the banking industry and foreign exchange market where we operate. While we are not totally surprised by the decision, we, however, believe there are better ways of addressing the challenges in the foreign exchange market.”

He regretted that the BDCs were always blamed whenever there was naira volatility. “Suffice to mention that before the CBN started selling dollars to BDCs in 2006, there were about 270 BDCs in the country. Despite the harsh operating environment, these operators were able to survive by servicing their clients. Secondly, the BDC industry was created by the CBN to fill a critical gap in the retail segment of the foreign exchange market. Furthermore, the decision to sell dollars to BDCs was in recognition of the role of BDCs to counter the effect of the illegal currency traffickers and the continued depreciation of the naira in the parallel market,” he said.

He explained that it was the involvement of the BDCs through the direct sale of dollars that led to the historic convergence of exchange rates in the country in 2006. “Thus, contrary to the impression created by the CBN, BDCs are not the problem of the foreign exchange market, rather they are solutions to deep rooted  problems in the market namely activities of illegal foreign exchange operators and the wide gap between the official  and the parallel market exchange rates. And they have performed creditably well in these regards. He explained that while there are over 3000 licensed BDCs, how many of them  does the CBN sell dollars to on a weekly basis?” he asked.

He added: “In the last one month, the CBN has been rationing dollar sales to BDCs, with less than half accessing the dollar windows.  The Governor should have stated how much dollars the CBN actually sold to BDCs on an annual basis rather than estimating how much is been sold. For example, in 2014, according to the quarterly economic reports of the CBN, the CBN sold US$4.4 billion to BDCs while it sold US$43.65 billion to banks through the Retail Dutch Auction. This reveals that out of the US$48.09 billion sold by the CBN, less than 10 per cent was sold to BDCs.”

Gwadabe said the decision of the CBN to stop dollar sales to BDCs has grave implications for the economy.  “First is the spike in the parallel market exchange rate from ₦270 to over ₦290 per dollar within three days of its pronouncement. Over time this would lead to increased scarcity of dollars even for legitimate activities and further depreciation of the naira,” he said.

Adding: “Given the import dependency of the country and the inability of importers to access dollars in the official market, the increased exchange rate would aggravate the inflationary pressure in the economy, as prices of goods and services rise in response to the continued depreciation of the naira.”