Bureaux de change operators eye $21bn remitted by diaspora as a way around dollar scarcity

NIGERIA's beleaguered bureaux de change (BDC) operators are targeting the annual $21bn remittances send home annually by the diaspora as a means to swell their empty coffers that have been severely depleted by the collapse in global oil prices.

 

Over recent years, Nigeria's BDC's have prospered as high oil prices have guaranteed them a continuous source of dollars. Last year. oil prices were as high as $100 a barrel, ensuring that Nigeria's BDC's had easy access to foreign exchange but this they have collapsed and currently stand at around $32 a barrel.

 

Following the crash, the Central Bank of Nigeria (CBN) has suspended its sale of dollars to Nigeria's commercial banks and BDCs, making it hard for them to obtain foreign exchange. In a desperate bid to get round the problem, the Association of Bureau De Change Operators of Nigeria (Abcon), has asked the CBN allow its over 3,000 members operate correspondence bank accounts, that will give them access to diaspora finance.

 

Abcon president Alhaji Aminu Gwadabe, said the body has already made a proposition to the bank and if it is approved, his members will be able to operate like money transfer agents. According to the World Bank Migration and Remittances Factbook, Nigerians living abroad sent home $20.8bn in 2015, making the country the sixth largest remitter of funds in the world.

 

Alhaji Gwadabe added that the CBN is currently reviewing a proposal from Abcon and he is confident of getting positive feedback because of the need to raise the dollar liquidity position in the market, which will also boost naira stability. He pointed out that if they got approval, it would enable BDC operators open forex accounts with the Bank of America, Barclays Bank or any other international lender.

 

According to Alhaji Gwadabe, such accounts would allow Nigerians living abroad send funds to their relatives or Nigerian counterparts through foreign banks. He added that the local BDCs will credit the recipients with the naira equivalents of the dollar credited to their accounts with the foreign banks.

 

Alhaji Gwadabe said: “It is a proposal before the CBN because we want to help it expand the dollar supply side and make the market more liquid. We want the BDCs to be agents of Western Union and be involved in diaspora remittances.”

 

He added that this practice, when approved, he said would not only boost dollar liquidity in the market but helps the country navigate through raging currency risks. Earlier this year, the CBN had entered an agreement with BDC operators on ways to bridge dollar liquidity crisis in the sector.

 

As part of this agreement, the CBN has agreed to source petrodollars from international oil companies (IOCs) and other autonomous sources according to Alhaji Gwadabe. Yesterday, Abcon and the CBN management led by its governor Godwin Emefiele, held a meeting to find ways out of the dollar crisis currently afflicting the sector.

 

“The CBN agreed to be sourcing for dollar from IOCs and selling to the BDCs between 198 and 201 to a dollar. We have also accepted to ensure that our members follow the regulatory guidelines and not sell dollars obtained through the autonomous sources over the required margin," Alhaji Gwadabe added.