Why Nigeria banned sales of foreign exchange to currency traders

The Central Bank of Nigeria will no longer sell foreign exchange to Bureau Du Change operators, accusing the parallel market of becoming a conduit for illicit forex flows and graft.

In announcing the move, the regulator said it will sell dollars and other foreign currencies directly to commercial banks, which have been mandated to sell to Nigerians.

Weekly sales of foreign exchange by the Central Bank will henceforth go directly to commercial banks, the governor, Godwin Emefiele, said on Tuesday in a live TV broadcast after announcing that the bank has retained its benchmark policy rate.

“We are concerned that BDCs have allowed themselves to be used for graft.”

He accused international bodies, including some embassies and donor agencies, of complicity in illegal forex transactions that have hindered the flow of foreign exchange into the country. The organisations, he said, are funneling forex through the black market rather than using the official Investors and Exporters (I&E) window, called Nafex.

He further warned that the regulator will “deal ruthlessly” with banks allowing illegal forex dealers to use their platforms and will report the defaulting international organisations to their regulators.

“We will deal with them ruthlessly and we will report the international bodies.”

Starting in 2017, Nigeria began using multiple exchange rates which the Central Bank routinely defended. Multilateral lending institutions like the World Bank and the International Monetary Fund had pushed for the unification of Nigeria’s multiple exchange rates.

Accordingly, Mr Emefiele said banks are mandated to “immediately” and transparently sell forex to customers who present the required documents. All banks are to immediately create dedicated tellers for the same purpose.

“This measure is not punitive on anyone, but it is to ensure the central bank is able to carry out its legitimate mandate of serving all Nigerians,” Mr Emefiele said.

The bank also announced that it will also no longer process applications for BDCs licenses in the country.

Share this

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn

Be the first to know

Get our stories first