•BDCs seek exclusion of banks from PTA, BTA trade
By Kelechi Mgboji
Assistant Business Editor
Bureau de change (BDC) operators want banks to stop selling dollars for personal travel allowance (PTA) and business travel allowance (BTA) and concentrate on core banking business.
Banks and BDCs currently sell foreign exchange (forex) for PTA and BTA.
From another flank, limits on forex sales are to be effectively enforced as the Central Bank of Nigeria (CBN) has engaged the Securities and Exchange Commission (SEC) and BDCs to implement the rule.
The objective is to sanitise the retail segment of the forex market and engender policies to facilitate better allocation of forex, based on genuine demands.
Both financial market regulators have made it mandatory to demand bank verification number (BVN) in every forex transaction.
BVN requirement reduces dollar demand
A foreign exchange dealer told TheNiche that BVN requirement has significantly reduced dollar demand at BDCs, which may strengthen the naira at the parallel market and close the gap between official interbank and parallel market rates.
Forex buyers began bypassing BDC operators after the CBN directed on November 5 that banks and licensed BDCs demand BVN before selling forex.
CBN Director (Banking Payment Systems), Dipo Fatokun, confirmed that the CBN is working with the SEC and other stakeholders to ensure total compliance with the directive.
Expectations that the development may strengthen the naira became reinforced after members of the National Assembly kicked against linking BVN requirement with BDC transactions.
Illegal fund transfers
In reaction, the CBN explained in a circular that “the adoption of BVN as a condition for the purchase of forex is expected to reduce the incidence of multiple purchases, round tripping and illicit transfer of funds.
“It facilitates enforcement of authorised limits of forex sales to end users, sanitise the retail segment of the market and engender policies that will facilitate better allocation of forex, based on genuine demands.”
The CBN said discussion with the lawmakers has begun to address their concern.
Fatokun insisted that fear to submit BVN, which has to do with proper identification, cannot be expressed by those who will want to do legitimate business.
“If BVN has to do with identity, why should anybody hide his identity if he has nothing to hide?
“We’re discussing with them. Those who actually want to procure $5,000 or less will not have problems with submitting their BVN where it is required.
“We believe that those who will not want to give their BVN at BDCs are probably those that will want to buy $100,000 or $1million and for businesses that are not legitimate. That is the fear,” Fatokun he argued.
BDC seeks reduction in official, parallel rate gap
The Association of Bureaux De Change Operators of Nigeria (ABCON) has also mapped out strategies to reduce the gap between official and parallel market forex rates, saying it will encourage arbitrage if left unchecked.
BDC owners met in Lagos and called on the CBN to disengage banks from the sale of dollars for PTA and BTA and make it an exclusive business of BDCs.
Last week, the gap in the two forex windows was N38 with interbank market rate at N197 per dollar and parallel market rate N228 per dollar.
BDCs outlined measures to close the gap to include publication of the names, addresses, and contact details of BDCs and forex rates in national dailies.
They agreed to constitute a price control mechanism committee to ensure price and market stability.
ABCON also resolved to form a reconciliation committee of BDC owners and CBN officials to end the rift between ABCON factions.
It agreed to write a position paper to the CBN seeking an extension in the deadline for compliance on the use of BVN while emphasising their resolve to comply with monetary and fiscal policies.
SEC, ICSAN to firm up corporate governance
The SEC is also intensifying efforts to collaborate with other regulators to ensure good corporate governance in the capital market.
SEC Director General, Mounir Gwarzo, told Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN) members who visited him in Abuja that the commission will work with ICSAN to promote corporate governance.
He reiterated that ICSAN has a major role to play in safeguarding the rights of shareholders.
His words: “We have very onerous responsibilities to enforce the corporate governance and in doing this, collaboration is very important.
“When you look at the market, our scope is wide; apart from the quoted companies you are also looking at about 800 or 1,000 operators.
“When we finish with the quoted companies we also want to extend the code and the compliance to all registered operators.
“What we started some few years ago was to say that any operator that is to be registered in the market must have a compliance officer however excellent the sponsored individual has done.
“Once your compliance officer has not met our minimum requirement that fund will not be registered and the compliance officer has a lot of responsibilities apart from the normal requirements in terms of returns to other regulatory institutions.
“It is also to ensure that the right corporate governance practice is being implemented.”
Gwarzo disclosed that a new corporate governance code for the capital market would soon be launched by the SEC.
“We don’t want to launch this code and there would be difficulties and so we need to put deliverables in place.
“One of the things we have done is training and so far over 70 per cent of quoted companies have attended that training.”
The SEC also plans an enlightenment campaign to ensure good corporate governance is taken to the next level.
ICSAN President, Nat Ofo, said “the essence of this visit is to smoothen the relationship between the SEC and ICSAN. We felt that it is better to have this discussion and review the things we can do together.
“This will enable us draw out the areas in which we can work together, particularly corporate governance.
“ICSAN is the custodian of corporate governance and the SEC as far as we are concerned is the owner of corporate governance in Nigeria and we will partner with the SEC to deliver that.”
He added that ISCAN can assist the SEC in doing corporate governance audit on any new company wishing to list on the Nigerian Stock Exchange.