Naira Freefall: BDCs to sack 30,000 workers, blames forex drought, CBN policy

Godwin Emefiele, CBN governor, had announced a new foreign exchange policy, part of which included the stoppage of weekly dollar sales to BDCs.

According to various media reports, Alhaji Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON), yesterday said that some 30,000 Bureaux De Change (BDC) workers would be sacked within the first quarter of this year.

Gwadabe stated that the move is a direct result of the continued loss of business by operators after the Central Bank of Nigeria’s (CBN) stoppage of weekly dollar sales to the body.

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

Godwin Emefiele, CBN governor, had announced a new foreign exchange policy, part of which included the stoppage of weekly dollar sales 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.

However, Gwadabe doesn’t agree with the CBN governor, saying: “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.”

READ: Apex bank, forex officers to meet over Naira freefall

“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, expressing his regret that BDCs were always blamed whenever there was naira volatility.

“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 parallel market exchange rates. And they have performed creditably well in these regards. While there are over 3000 licensed BDCs, how many of them does the CBN sell dollars to on a weekly basis?” he asked.

“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 $4.4 billion to BDCs while it sold $43.65 billion to banks through the Retail Dutch Auction. This reveals that out of the $48.09 billion sold by the CBN, less than 10 per cent was sold to BDCs,” Gwadabe added.

Gwadabe further stated that the decision of the CBN to stop dollar sales to BDCs has grave implications for the economy.

CBN Governor, Emefiele, had directed the CBN to stop selling dollars to BDCs as part of his efforts to stem the freefall of the Naira which has been trading averagely at about N305 to the dollar on the parallel market for the past few days.