CBN stops selling forex to BDC operators over corruption, greed

The Central Bank of Nigeria (CBN) has discontinued the sale of foreign exchange to Bureau De Change (BDC) operators in the country.

The apex bank sells an estimated $5.72 billion per year to over 5,500 BDC operators, but that allocation will now be channeled to commercial banks.

CBN Governor, Godwin Emefiele, after a meeting of the Monetary Policy Committee (MPC) on Tuesday, July 27, 2021, accused BDC operators of sabotaging the Bank's goal to safeguard the value of the naira.

The currency's value has been sliding for years, most notably due to the recurrent collapse in global oil prices as the nation depends on oil sales for a significant portion of its foreign reserves.

Emefiele said the apex bank is finding it more difficult to meet its mandate of maintaining Nigeria's forex reserve due to the greed and corruption of the operators.

He said they were originally meant to serve retail end users who need $5,000 or less, but have instead become wholesale dealers, illegally dealing in forex to the tune of millions of dollars per transaction.

"Despite that Nigeria is the only country in the world today where a Central Bank sells dollars directly to BDC operators, operators have not reciprocated the bank's gesture to help maintain price stability in that market," he said.

The CBN boss also alleged that BDC operators have become a conduit for illicit financial flows, and turned themselves into agents that facilitate graft and corrupt activities.

The 59-year-old lamented that several international organisations, embassies, and development finance institutions also illegally patronised the operators to fund local operations in contravention of forex laws.

He said the corruption and greed of the operators have led to the gradual dollarisation of the Nigerian economy that has terribly impacted monetary policy.

Emefiele noted that the number of BDC operators rose from 74 in 2005 to over 5,500 this year because of the rent-seeking behaviour that is enriching many.

He said the CBN has been receiving at least 500 applications for new BDC licenses every month, licenses he announced today will no longer be issued, including those already in the pipeline.

"This is a scarce resource and CBN cannot continue to allow this unwholesome practice to continue in Nigeria. This is a huge hemorrhage on our scarce forex reserves," Emefiele complained.

All commercial banks have been directed to create dedicated teller points in designated branches for sale and disbursement of forex for customers as stipulated by the law.

The CBN announced a similar decision, with identical reasons, in 2016, but restarted selling forex to operators months later.