BDC Operators Groan Under Tight Monetary Policy | Independent Newspapers Limited
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BDC Operators Groan Under Tight Monetary Policy

Posted: Mar 25, 2016 at 3:00 am   /   by   /   comments (0)




The Central Bank of Nigeria’s (CBN) policies, including the non-devaluation of the naira and the Tuesday hike in the Monetary Policy Rate (MPR) have further tightened the noose on bureau de change operators.

The BDCs are said to divert scarce foreign exchange to the black market to earn “super normal returns”.

Several pressure groups have called for naira devaluation because of oil price pressure and rising inflation.

But Independent investigation reveals that the hike in MPC in concert with the non-devaluation of the naira effectively clips BDCs’ round tripping tendencies.

The BDCs and some clandestine players are believed to be behind efforts at forcing a reversal of the ongoing monetary policies in the country in the last six months. They have even called for the removal of Godwin Emefiele, the CBN governor.

Their measures, according to sources, include sustained media blitz portraying the policies in bad light; tinkering with market instruments to force continued slump of the naira and high powered lobby to the presidency to effect a change of guard in the CBN.

The angst of the BDCs, it was gathered, stems from the CBN’s policy preventing them from sourcing forex from the apex bank.

It would be recalled that President Muhammadu Buhari had given public support to the CBNs policy of non-devaluation, speaking up even at international fora on the need not to tinker with the naira value.

According to the president, devaluing the naira will hurt the economy more than it will help it. But from investigations, the syndicate fighting behind the scene to ensure that the policy does not succeed is unlikely to relent.

It was further learned that beyond the BDCs, that are easily identifiable, are powerful state governors who use forex speculators to change money as a first step of moving stolen funds abroad.

The swelling numbers of the syndicate also include importers whose businesses thrive on importation of the 41 items on the list of items that are restricted from sourcing forex from CBN.

Condemning the actions of the currency profiteers, a Coalition of Civil Society Groups had said that “by their action, these profiteers have killed jobs in Nigeria and created jobs abroad. They have exported prosperity abroad and imported poverty into their fatherland. But as long as their huge profit margins are guaranteed, they do not care. What Emefiele and his team have done is to say that we can no longer import unemployment and export wealth out of Nigeria”.

“These people want Emefiele out at all cost. All the stories in the media are just calculated attempt to smear the CBN governor hoping that Mr President would sack him,” a source told Independent.

There is raging debate on the need to or not to devalue the naira, and those who call for the currency devaluation hinge their argument on strains imposed on the naira exchange rate by tumbling oil prices and what they term the effects of capital controls and restrictions on currency trading imposed by the central bank to prop up the naira.

But government through the CBN says the country, which is currently facing tough times with declining crude oil prices, cannot risk devaluation of its national currency, considering that the country was importing virtually everything it needs, including textiles and tooth pick.