CBN’s Forex Sale To BDCs Fuelled Round-tripping- World Bank

By Fola James

The World Bank has revealed how the Central Bank of Nigeria, CBN encouraged round- tripping for years by supplying foreign exchange to bureau de  change operators. The Governor Godwin Emefiele- led CBN’, in July this year cancelled  the weekly supply of at least $20,000 to to more than 5000 bureau de change operators in the  country  after the apex bank accused some of the operators of sponsoring terrorism and money laundering.

Announcing the cancellation  five months ago, Emefiele said the initial intension of allocating forex to BDCS was to create jobs, he, however,  noted that the operators have turned the business to avenues of corruption and criminality. The CBN now sells forex to commercial banks which now sell to customers.

The apex bank Governor said he became concerned when BDCs “trather than sell about $5,000 to travellers, they have turned themselves to  agents that facilitate graft and corruption in Nigeria and we   believe that this cannot be tolerated.

“The CBN has also been awashed with complaints   about the modus operandi of BDCs and   it is becoming so disgraceful that we feel that at this stage we need to   take a decision.

“There is evidence of prevailing ownership of several BDCs by the same promoters to procure multiple foreign exchange from the CBN. Several international organisations, embassies patronise BDC through illegal forex dealers to fund their institutions.

“The Committee deliberated extensively on this, and this is an issue that even the authorities had engaged the CBN on   and we tried our best to see how we could defend the BDC operators. Even our leaders who constitute political authorities have raised concerns about the modus operandi of   BDC operators in Nigeria. We did our best to defend them,    that they play certain roles in our economy.

“At this stage, we cannot no longer continue, we are carrying political authorities along because they themselves had wanted this to stop. Now that we can no longer continue because of the illegal activities, and corrupt tendencies exhibited   by the players in the sector, we believe this must stop and we have   stopped it henceforth.

“We know that there are some people who legitimately would want to go to them to buy dollars, we are saying they should go to their bank and validate minimal documentation and they will attend to you.   Indeed they will transfer your money electronically, in line with our cashless policy; they do not need to give cash. We cannot be talking about cashless naira and be supporting cash in dollars, an attempt to dollarize our economy.   We cannot continue with sharp practices that are going on there. If you know you have a legal transaction to make,   go to your bank, you do not need BDC given the form they were found in recent times.

“What happens in that (parallel) market as insignificant as the volume is, they are all perpetrating corruption, exchange of bribe money instead of taking naira in big bags, they choose to collect dollar in small bags, we will not facilitate that for you again, it is not what CBN should support,” Emefiele said.

The Bretton Wood, United States of America, USA based world financial body said in its November edition of its Nigeria Development Update, that the CBN encouraged round-tripping after it decided in 2005 to be supplying BDCS with forex.

The bank which condemned the manner the nation”s foreign exchange policy has been managed by the apex bank said  in the report that “the CBN has intermittently supplied forex to BDCs since 2005, providing ample opportunities for currency round-tripping.”