• Friday, March 29, 2024
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ABCON moves to save Naira

Brewing up a mess in Nigeria with a controversial Naira rebrand

The Association of Bureaux De Change Operators of Nigeria (ABCON) has developed a roadmap campaign plan needed to save the naira from further decline and to enhance exchange rate stability.

The ABCON National Executive Council Wednesday said the move to save the naira was agreed by the body at the conclusion of its meeting in Lagos, where it unveiled strategies for saving the local currency, bridge the exchange rate gaps and curb volatility in the forex market.

The naira exchanges at N593.5 to dollar at the parallel market and N415.83 to dollar at the official market creating a rate gap of N177.67 per dollar.

The ABCON President, Aminu Gwadabe said there was an urgent need to enhance dollar liquidity in the market and ensure stability of prices in the economy.

These steps, he said, would save the local currency and economy from the impact of election spending that has kept inflation at double digits for a very long time.

The ABCON boss disclosed that the depreciation of the naira against global currencies was due to pressure from rising dollar demand without sufficient liquidity to meet the demands from retail end users, manufacturers and other key players in the economy.

“The naira has consistently come under serious pressure due to dollar scarcity making it difficult for forex end users, manufacturers and key industry players to access dollars needed to meet their needs. ABCON under my leadership will continue to encourage our members to play the vital role of closing the exchange rate gaps in the market and reducing widening premium between the parallel market and the official window,” he said.

Gwadabe listed several factors that continue to undermine the naira stability and the local currency’s value against other currencies.

The ABCON boss called for the creation of BDCs’ Autonomous Foreign Exchange Trading Window (BAFEX) with a determined maximum daily limit for legible BDCs to access dollars from banks, autonomous market and diaspora forex widow at the prevailing market prices.

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He requested enhancement of existing BDCs’ automation portals to file transaction returns on CBN/ABCON/NFIU/NIBSS portals for effective regulatory monitoring and supervisions.

Gwadabe also sought for the creation of an automation portal to encourage registration of undocumented and unlicensed operators for effective monitoring, identification and tracking of their transactions.

He said the reluctance of the Central Bank of Nigeria (CBN) to open new windows through which foreign exchange can be attracted to the economy remains a key factor in the continued fall of the Naira.

He said that Bureaux De Change (BDCs)’s demand that it be included in the diaspora remittance inflow channel to allow Nigerians in diaspora remit funds to Nigeria through the CBN’s guidance has affected the volume of dollar inflows to the economy.

The World Bank’s latest Migration and Development Brief showed that $630 billion was attracted to low- and middle-income countries (LMICs) in 2021, with Sub-Saharan Africa attracting $49 billion.

He said Nigeria’s contribution to the remittances fund will rise when BDCs are allowed to receive funds into the economy.

According to him officially recorded remittance flows to low- and middle-income countries are expected to increase by 4.2 per cent this year to reach $630 billion and Nigeria should take immediate steps to be part of the booming remittance market, to boost dollar inflows and stabilise the naira.

Gwadabe said the BDCs are to perform this role through contactless and digitized channels that make collections easy and seamless.

He said there is urgent need to review the guidelines on BDC’s Scope of operations to include participation in payment space, such as agency banking, Point of Sale (PoS) services, inbound and outbound forex transfers, ATM Forex services, to reflect global business model practice.

He suggested that the BDCs should be allowed to access dollars or diaspora remittances through the autonomous forex windows like allowing operators to receive IMTOs proceeds, carrying out online dollar operations and Point of Sale (PoS) Agency, among others.

Gwadabe insists that now is the time to break the current industry monopoly that puts the remittances market in the hands of few players depriving others from tapping into the plan.

The ABCON boss also called for the establishment of training institutes to enhance capacity and infrastructure in the industry and broadening players’ business scope with cash-back incentives for those that patronize BDCs while also implementing a less cumbersome and complex documentation requirements for end users.

“The BDCs should be able to operate a network of digital solutions for PTA/BTA. This would reduce overheads, and improve profitability. Some BDCs might still consider working closer with commercial banks. The ABCON can also be recognized as a self-regulatory organization to enable it to operate effectively and sanction erring members,” he stated.

“We wish to reiterate our resolve to align with the policy thrust of the apex bank and ensure that ABCON Members play their roles professionally and strategically in the interest of the market and economy,” he said.

He said that de-marketing of BDCs by regulators and security agencies is not good for the stability of the market, rather the strength of over 4,500 operators can be harnessed to bring forex closer to the retail end users and strengthen liquidity in the market.