CBN Unveils New Operational Mechanism of Forex Sales by Bureau De Change operators

Acting CBN Governor, Mr. Folashodun Shonubi

The Central Bank of Nigeria (CBN) has unveiled a new operational mechanisms for the sale of forex by Bureau De Change (BDCs) operators in the country.

This fresh measure is in a bid to enhance the efficiency of the Nigerian Foreign Exchange Market and the CBN has reeled out series of operational changes for the Bureau De Change (BDC) segment.

This is initiative is coming 25 months after Godwin Emefiele, the suspended CBN governor, announced the discontinuance of foreign exchange sales to that segment of the Bureau De Change forex market.

This new policy thrust of the CBN was announced on August 17, 2023 and outlines the key measures aimed at streamlining and improving the BDC operations…

Under the new framework: “The spread on buying and selling by BDC Operators shall be within an allowable limit of -2.5% to +2.5% of the Nigerian Foreign Exchange market window weighted average rate of the previous day,” the CBN circularv uploaded to its website on Friday, 18th of August, 2023 revealed.

Furthermore: “Mandatory rendition by BDC Operators of the statutory periodic reports (daily, weekly, monthly, quarterly and yearly) on the Financial Institution Forex Rendition System (FIFX) which has been upgraded to meet individual Operator’s requirements.

“Operators are to note that with effect from the date of this circular, non-rendition of returns would attract sanctions which may include withdrawal of operating license. Where Operators do not have any transaction within the period, they are- expected to render nil returns. Please be guided accordingly and ensure compliance.”

This new measure is expected to provide more stability and transparency to exchange rate fluctuations, ultimately benefiting both BDC operators and the general public.

Another significant alteration is the mandatory submission of periodic financial reports by BDC operators.

These reports, including daily, weekly, monthly, quarterly, and yearly renditions, are to be submitted through the upgraded Financial Institution Forex Rendition System (FIFX), tailored to meet the specific requirements of each operator. This change aims to enhance oversight and ensure that the BDC sector operates with greater accountability.

The circular further emphasizes that failure to submit accurate returns within the specified timeframe will result in sanctions, potentially leading to the withdrawal of operating licenses. Even in cases where BDC operators have had no transactions during a given period, they are required to submit nil returns, thereby fostering a culture of compliance and thorough record-keeping.

The CBN however advised all BDC operators and the public to familiarize themselves with these new guidelines and adhere to them strictly.

By implementing these measures, the Central Bank of Nigeria anticipates a more robust and well-regulated BDC segment that aligns with broader efforts to enhance Nigeria’s foreign exchange market efficiency.

The new measure apparently marks the re-entry of BDCs into the country’s foreign exchange market.

This is a clear departure from previous policies, including those enacted under the tenure of former CBN Governor Godwin Emefiele, which had temporarily excluded BDC operators from participating in the market.

The new policy which is a significant shift, shows a concerted effort by the central bank to reengage BDC operators and reintegrate them into the foreign exchange landscape.

Economic watchers hope that the reintroduction of BDC operators will regulate the parallel forex market and therefore stop the unbridle depreciation of the naira worsened by the activates of black market operators

About the author

Joseph Chukwuma Oputa

Joseph Chukwuma Oputa is the Managing Editor of Maslow Businessnews and Physicians News publications published by Maslow Business News Publications, Lagos, Nigeria.

Joseph Oputa is a proud Alumnus of the prestigious Nigerian Institute of Journalism, Lagos and Federal Polytechnic, Bida, Niger State.

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