CBN Stops Sale Of FX To BDCs

*Retains MPR At 11.5 Percent

The Central Bank of Nigeria says it has ended the sales of forex to Bureau Du Change operators, saying the parallel market has become a conduit for illicit forex flows and graft.

The bank said it will also no longer process applications for BDC licences in the country.

Weekly sales of foreign exchange by the CBN will henceforth go directly to commercial banks, the CBN governor, Godwin Emefiele, said Tuesday in a live TV broadcast after announcing that the bank has retained its benchmark policy rate.

“We are concerned that BDCs have allowed themselves to be used for graft,” Mr Emefiele said,.

He said international bodies, including some embassies and donor agencies, have been complicit in illegal forex transactions that have hindered the flow of foreign exchange into the country.

He said the organisations have chosen to channel forex through the black market than use the official Investors and Exporters (I&E) window, called Nafex.

Mr Emefiele said the regulator will “deal ruthlessly” with banks allowing illegal forex dealers to use their platforms and will report the defaulting international organisations to their regulators.

“We will deal with them ruthlessly and we will report the international bodies,” he said.

Accordingly, Mr Emefiele said banks are mandated to “immediately” and transparently sell forex to customers who present the required documents. All banks are to immeidtaely create dedicated tellers for the same purpose.

Cusromers not attended to by the banks are to report to the CBN through a toll free number: 0700 22 55 226 or email: cbd@cbn.gov.ng.

“This measure is not punitive on anyone, but it is to ensure the CBN is able to carry out its legitimate mandate of serving all Nigerians,” Mr Emefiele said.

The MPC also retained the Monetary Policy Rate at 11.5 per cent at the end of the meeting.

It also retained the Cash Reserve Ratio and Liquidity Ratio at 27.5 per cent and 30 per cent respectively.

Announcing the committee’s decision, Emefiele said, “The MPC made the decision to hold all parameters constant. The committee thought by unanimous vote to retain the Monetary Policy Rate at 11.5 per cent.

“In summary, MPC voted as follows, one, retain MPR at 11.5 per cent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the CRR at 27.5 per cent; and retain the Liquidity Ratio at 30 per cent.”

Speaking on the the decision to stop forex sales to the BDCs, he said, the MPC noted with disappointment and great concerns that the BDCs had defeated their purpose of existence to provide forex to retail user, but instead, they had become wholesale and illegal dealers.