CBN resumes sale of forex to recapitalised BDCs, gives new biding code

There are indications that the Central Bank of Nigeria (CBN) may have resumed the sale of foreign exchange (forex) to the recapitalised Bureaux de Change (BDCs) as about 2,022 of the total 3,500 were said to have been supplied with forex last week, with Lagos zone accounting for 964.

BusinessDay investigations revealed that a total of 2,087 BDCs may have scaled the hurdle of recapitalisation and mandatory cautionary deposit and have been issued new code of conduct to operate in the forex market.

The implication is that about 514 BDCs may have lost their licence due to their inability to meet the capital requirement.

The new code of conduct is expected, among other things, to define the relationship between the BDCs and the banks and among the BDCs themselves.

Already, there is pressure on forex at the parallel market as naira on Monday lost N0.50k or 0.3 percent to the US dollar, closing at N172/$ compared to N171.50/$ last Friday.

Meanwhile, at the interbank market, naira gained 40 kobo against the dollar as it closed at N162.40/$ as against N162.80/$ last Friday.

There are three channels of dollar access by BDCs. They include the apex bank, banks, and individuals.

Investigations show that in order to ensure that dollar is sold to only those BDCs that met the capital requirement, the CBN had issued a new code to them while de-activating the former code.

Andrew Elueni, chief executive officer, Prime Link BDC, told BusinessDay that the successful BDCs had sent their application for forex bid to CBN while waiting for the supply of the greenback by CBN on Wednesday.

He confirmed to BusinessDay that the new code given to successfully recapitalised BDCs would help the regulators to know those who are qualified for forex bidding.

While acknowledging that last week witnessed a hike in foreign exchange rate due to suspension of dollar sales to BDCs by the CBN, he said he expected the naira to drop to about 168/$ following the resumption of forex sales to recapitalised operators.

The CBN had said in its earlier circular that upon the expiration of the recapitalisation deadline of July 31, 2014, it would cease to fund any BDC that failed to comply with the new requirements, with Mu’azu Ibrahim, its spokesman, saying the only option available to the affected BDCs was to go into mergers and acquisition.

“That is the area we should encourage them because it will make them stronger and bring down cost of operation,” Ibrahim had said.

HOPE MOSES-ASHIKE