BDC Operators Seek Role In Remittance Industry | Independent Newspapers Limited
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BDC Operators Seek Role In Remittance Industry

Posted: Apr 7, 2016 at 3:00 am   /   by   /   comments (0)



With increased activities in the Nigeria’s remittance service, which is put at $21bn annually, Bureaux De Change operators in the country have urged the Central Bank of Nigeria (CBN) to integrate them into the money transfer business.


This, they say, will ease the challenges facing the industry and deepen the country’s payment system.


The President, Association of Bureaux De Change Operators of Nigeria (ABCON) Alhaji Aminu Gwadabe, made the call while speaking with journalists in Lagos.


He said that the association had already sent a proposal to the apex bank asking the apex bank to allow BDC operators operate correspondent bank accounts that would enable function like other money transfer companies such as Western Union and Money- Gram, partaking of the about $20.8 billion in Diaspora remittances that the country receives annually.


Gwadabe said the proposal, which is still being assessed by the banking watchdog, will enable operators open forex account with Bank of America or Barclays Bank or any other international bank, through, which Nigerians living abroad can send funds home through the foreign bank accounts run by BDCs while the recipients claim their money at home.


This practice, when approved, Gwadabe said, would not only boost dollar liquidity in the market, but also make it possible for the country to tackle currency speculators.


The ABCON Chief pointed out that apart from operating in the remittances and payments space, BDCs could be strengthened to operate across the value chain of the retail foreign exchange sector as well as local and international travel insurance brokerage deals.


This, he said, could help turn them into a booming industry that can employ millions of Nigerians. He further noted that BDCs were not just a critical factor in the CBN’s plan to achieve price and exchange stability but have remained one of the major contributors to government’s revenues.


According to him, with over N250 billion worth of investments in the economy, BDCs have not only boosted employment generation but have significantly contributed to the CBN’s revenues through the one per cent commission that the regulator charges on dollar sale to operators.


Commenting on the CBN’s decision in January to stop weekly dollar sales to BDCs, Gwadabe stated that while members of the association had put the issue behind them, they had resolved to continue to seek all possible avenues to deepen dollar liquidity in the market, sustain their businesses and contribute to the country’s economic growth and development.


He regretted that the BDCs were always blamed whenever there was naira volatility. “Suffice to mention that before the CBN started selling dollars to BDCs in 2006, there were about 270 BDCs in the country.


Despite the harsh operating environment, these operators were able to survive by servicing their clients,” he said. The ABCON President recalled that the BDC industry was created by the CBN to fill a critical gap in the retail segment of the foreign exchange market, noting that the decision to sell dollars to them was because they have the capacity to counter the activities of illegal currency dealers and the continued depreciation of the naira in the parallel market.


He emphasised that both the CBN and BDCs could collaborate to find sustainable solutions that can help the country address the current forex crisis besetting the economy. Gwadabe said, “The BDCs do not depend on exchange rate to make profit and therefore will benefit nothing from a depreciated naira.


Depreciation affects operators’ working capital, as they are more interested in turnover than the exchange rate.”