CBN allocates $15.7m to BDCs daily after a three-year hiatus
By Jeph Ajobaju, Chief Copy Editor
A total 785 Bureau de Change (BDC) operators across the country got $20,000 allocation each from the Central Bank of Nigeria (CBN) on Tuesday, a total $15.7 million, to ease foreign exchange (forex) scarcity.
After excluding BDCs since 2021, their allocation will now be done daily, a policy shift announced by CBN Trade & Exchange Department Director Hassan Mahmud that is expected to ensure dollar liquidity and curb distortions in the forex retail market.
The criteria for eligibility include that BDCs
- Deposit their naira payments into designated CBN Foreign Currency Deposit Naira Accounts.
- Provide confirmation of payment along with other necessary documentation to facilitate disbursement at the appropriate CBN branches in Abuja, Awka, Lagos, and Kano.
The number of eligible BDCs dropped from more than 4,500 to 785 after the CBN audited their members, assessed operational digitilisation, and rendition of returns.
Mahmud explained the initiative is part of efforts to achieve a market-driven exchange rate for the naira and alleviate pressures feeding into the parallel market.
He said the allocation will be sold at a rate of N1,301 per dollar, a lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on February 27.
This strategy is anticipated to inject liquidity into the forex market and stabilise naira’s value.
The circular also outlines specific guidelines for BDC operators to sell forex to end-users at a margin not exceeding 1 per cent above their purchase rate from the CBN – so as to prevent excessive mark-ups and protect consumers from price exploitation.
The circular says in part: “The CBN has approved the sale of foreign exchange to eligible Bureau De Change (BDCs) to meet the demand for invisible transactions.
“The sum of $20,000 is to be sold to each BDC at the rate of N1,301/$- (representing the lower band rate of executed spot transactions at NAFEM for the previous trading day, as at today, 27th February 2024).
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Rewane tells Tinubu, using EFCC to chase BDCs won’t solve forex problem
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