CBN Stops Sale of Foreign Exchange to Bureau De Change (BDC) Operators
CBN governor Godwin Emefiele during the 4th Monetary Policy Committee (MPC) meeting that held on July 26 — 27, 2021, reached the following resolutions as regards BDC operators:
BDCs are established platforms for the sale and purchase of currencies.
- Foreign exchange would no longer be sold to BDC.
- FX will now be allocated to the banks.
- No new licences would be processed or issued. This also applies to licences currently being processed.
- Banks are to create a dedicated point for the sale of FX to customers who need it for legitimate purposes.
According to the CBN Governor, about $110 million is sold to CBDs on a weekly basis. This translates to about $5.72 billion on a yearly basis.
Why did the CBN decide this?
The CBN governor stated they had deviated from the objectives for which they were set up. The objective was to serve retail end users who have foreign exchange needs to the time of not more than $5,000. BDCs had become wholesale dealers, trading in millions of dollars per transaction.
Emefiele also accused them of facilitating money laundering.
A large proportion of the funds that went to BDCs found its way to the black market. The black market operates in illegal selling and buying of foreign currencies. Following the CBN move, there could be a bit of pressure on that end.
While foreign exchange will no longer be allocated to the BDCs, the CBN governor did not announce a withdrawal of their licences. In essence, many of them would either have to sort for FX from other sources or remain in limbo.