The Association of Bureaux De Change Operators of Nigeria (ABCON) has unveiled some strategies on how to save the naira from further decline and enhance exchange rate stability.
These strategies/roadmap campaign plans are needed to save the naira from further decline, bridge exchange rate gaps and curb volatility in the forex market.
This disclosure is contained in a statement issued by ABCON President, Alhaji Aminu Gwadebe, at the end of its National Executive Council meeting held on Thursday in Lagos, where he said that there was an urgent need to enhance dollar liquidity in the market and ensure stability of prices in the economy.
Gwadebe in the statement said that implementing those strategies will save the naira and economy from the impact of election spending that has kept inflation at double digits for a very long time.
The ABCON boss said 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.
Strategies to save the naira and bridge the exchange rate gap
Gwadebe outlined some of the strategies to include;
- The creation of BDCs’ Autonomous Foreign Exchange Trading Window (BAFEX) with determined maximum daily limit for legible BDCs to access dollars from banks, autonomous market and Diaspora forex window at the prevailing market prices.
- Enhancement of existing BDCs automation portals to file transaction returns on CBN/ABCON/NFIU/NIBSS portals for effective regulatory monitoring and supervisions.
- Creation of an automation portal to encourage registration of undocumented and unlicensed operators for effective monitoring, identification and tracking of their transactions.
- Review of 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.
- 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 said that now is the time to break the current industry monopoly that puts the remittances market in the hands of a few players depriving others from tapping into the plan.
- The establishment of training institutes to enhance capacity and infrastructure in the industry and broaden players’ business scope with cash-back incentives for those that patronise BDCs. This is while also implementing a less cumbersome and complex documentation requirements for end-users.
What the ABCON President is saying
Gwadebe said, “The BDCs should be able to operate a network of digital solutions for Personal Travel Allowance, PTA, and Business Travel Allowance, BTA.
“This would reduce overheads, and improve profitability. Some BDCs might still consider working closer with commercial banks.
“ABCON can also be recognised as self-regulatory organisation to enable it operate effectively and sanction erring members.’’
Gwadabe said that ABCON resolved to align with the policy thrust of the apex bank and ensure that its members play their roles professionally and strategically in the interest of the market and economy.
He warned that the 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.
He said that ABCON has developed multiple applications for BDCs’ transformation from being CBN cash dispensers to globally competitive entities with capacity to attract foreign capital flows to the economy.
Gwadebe said, “We support any measures that would lead to compliance with the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT).
“We support CBN’s exchange rate stability policies and urge security agencies to punish any BDC operator breaching corporate governance and compliance guidelines.
“It is our sincere belief that BDCs need to be integrated back officially to ensure their continuous potent role in exchange rate stability management.’’
The ABCON boss said that the recognition of the role of BDCs in Nigeria’s financial sector remains the first step to building a sustainable and viable forex market that is in tandem with international best practices.