The Central Bank of Nigeria, CBN, has announced its decision to sell foreign exchange worth $20,000 to each eligible Bureau De Change operator across the country.
The development came three years after the former CBN governor, Godwin Emefiele, announced the suspension of foreign exchange sales to BDC operators.
The apex bank disclosed this in a new circular issued and signed by the Director, Trade and Exchange Department, Hassan Mahmud, on Tuesday.
According to data obtained from the CBN website, there are 5,690 BDC operators nationwide.
However, about 1,373 BDC operators have been screened to get the allocation. The breakdown include Abuja, 186; Awka, 26; Kano, 376; Lagos, 785.
On July 27, 2021, the CBN discontinued the sale of foreign exchange to BDCs accusing them of trading FX wholesale that amounts greater than USD 5000, in contravention of their licences, and Nigeria’s FX regulations.
The former CBN governor then said the BDC operators had deviated from the objectives they were set up and had become agents facilitating graft and corruption in the country.
The latest circular, approving sale of forex to the BDC operators was titled, “Sale of Foreign Exchange to Bureau de Change Operators to meet retail demand for eligible invisible transactions.”
It noted that the move aimed at rectifying the persisting distortions in the retail segment of Nigeria’s foreign exchange market and bridge the widening gap in the exchange rate.
It said the allocation would be sold at a rate of N1,301/$, reflecting the lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market as of the previous trading day, dated February 27, 2024.
This means BDCs will buy at N1,301 and sell at ₦1,314.01.
The circular read, “Following the ongoing reforms in the foreign exchange market, aimed at achieving an appropriate market-determined exchange rate for the Naira, the Central Bank of Nigeria has observed the continued price distortions at the retail end of the market, which is feeding into the parallel market and further widening the exchange rate premium.
“To this end, the CBN has approved the sale of foreign exchange to eligible Bureau De Change to meet the demand for invisible transactions. The sum of $20,000 is to be sold to each BDC at the rate of N1,301/$- (representing the lower band rate of executed spot transactions at NAFEM for the previous trading day, as of today, 27th February 2024).
“All BDCs are allowed to sell to end-users at a margin NOT MORE THAN one per cent (1 per cent) above the purchase rate from CBN.”
The CBN, as part of fresh efforts to save the free fall of the naira, has rolled out a number of significant initiatives, including probing and clearing FX backlog, limiting forex for foreign education and medical tourism, and increasing BDCs’ minimum share capital.
