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Nigeria’s financial crimes watchdog EFCC has given the Association of Bureaux de Change Operators of Nigeria the go-ahead to publicly post the buying and selling rates of the naira against the dollar online.
The move is intended “to enhance competitiveness and price discovery in the market and challenge the parallel market,” said the group’s president, Aminu Gwadabe.
The step reverses measures by the previous leadership of the central bank to control bureaux de change and limit the visibility of the unofficial market in an effort to shore up the official naira. That move only drove activity onto the street and into the shadows.
Naira rates will now be broadly visible online — part of a wider effort by Africa’s most-populous nation to move away from a managed exchange rate and unify the two markets.
The Economic and Financial Crimes Commission has taken aim at currency traders, many who operate on the streets, accusing them of money laundering and manipulation.
In 2021, AbokiFX, a web platform that reports movements in the foreign exchange market, suspended operations as the Central Bank of Nigeria (CBN) placed its owners on investigations.
The bureaux will now be “upscaling,” the old website to “serve as a challenger to other platforms in the economy,” Gwadabe said.
The Bureaux de Change (BDC) segment of the Nigerian foreign exchange (FX) market was supposed to be tiny and serving the retail end of the market, but like an anomaly such as the tail wagging a dog, BDCs are now being blamed by the Central Bank of Nigeria (CBN) for triggering a relentless slide in the value of the naira.
The CBN had in June 2014, increased the minimum capital requirement for Bureaux De Change operations in Nigeria to N35m in order to weed out what it said were “unserious elements in that sub-sector” and correct some grave inefficiencies and sharp practices.
It then directed all existing Bureaux De Change to comply with the new requirements by July 15, 2014. Before the hike in minimum capital requirement from N10 million to N35 million, a total of 3, 208 BDCs were officially registered with the CBN.
In August 2014, the CBN announced that a total of 2, 442 BDCs met the new capital requirement, and by November 2014 a total of 2,512 BDCs had reportedly scaled the re-capitalisation hurdle of the CBN.
However, instead of putting measures in place to effectively monitor the new set of BDCs that had met its rules, the CBN went on another BDC licensing spree.
From the 2,512 BDCs licensed as at November 2014, the number jumped to 5,689 BDCs registered in Nigeria as at June 30, 2021, according to CBN data. That was equivalent to a 126 percent increase or 3,177 new BDCs licensed in just 7 years.
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