Two years after ban, CBN may resume sale of dollars to BDCs, issues new guidelines

The Central Bank of Nigeria (CBN) has announced additional guidelines for Bureau De Change (BDC) operators in a bid to improve efficiency of the Nigerian foreign exchange market.

The decision comes two years after the apex bank banned sales of dollars to BDCs amid efforts to stabilize the market. Although the latest directive did not clearly state that the central bank will resume the sale of dollars to the BDCs, it suggests so as guidelines were given to the BDCs on how to sell the foreign currency.

The new operational mechanism, contained in a circular dated 17 August, stated that the spread on buying and selling by BDC operators will be within an allowable limit of -2.5 percent to +2.5 percent of the Nigerian Foreign Exchange market window weighted average rate of the previous days.

In the circular, signed by O.S Nnaji, the Director of Exchange Department, the bank ordered a mandatory rendition by BDC operators of the statutory periodic reports (daily, weekly, monthly, quarterly and yearly) on the Financial Institution Form Rendition System (FIFX) which it said has been upgraded to meet individual operators requirements.

The apex bank warned that non-rendition of returns would attract sanctions which may include withdrawal of operating license with effect from the date of the circular.

“Where Operators do not have any transaction within the period, they are expected to render nil returns. Please be guided accordingly and ensure compliance”, the circular said.

Background

In August 2021, the CBN ended the sale of forex to Bureau De Change operators, saying the parallel market had become a conduit for illicit forex flows and graft.

The bank said it would no longer process applications for BDC licences in the country.

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Weekly sales of foreign exchange by the CBN was thereafter designed to go through commercial banks, the suspended governor of CBN, Godwin Emefiele, said at the time.

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

He argued that international bodies, including some embassies and donor agencies, had been complicit in illegal forex transactions that hindered the flow of foreign exchange into the country.