The Central Bank of Nigeria (CBN) has placed limits on the foreign exchange (FX) sales by Bureau De Change (BDC) operators.
The apex announced the directive on February 23, 2024, in a document entitled ‘Revised Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria’.
BDCs, according to the circular, may sell foreign currency in the equivalent of $4,000 and $5,000 for personal travel allowance (PTA) or business travel allowance (BTA), respectively, to an individual once every six months, the apex bank said.
This as the Presidential Candidate of the Labour Party in the 2023 general elections, Peter Obi described the arrest of Bureau de Change operators as well as disruption of their business by government agencies as primitive and escapist.
Similarly, Professor Ndubuisi Ekekwe, who is also an an entrepreneur, Lead Faculty of Tekedia Institute, and Chairman of Tekedia Capital, said Nigeria remembers Bureau De Change (BDC) operators again: ‘“BDCs may sell foreign currency up to the equivalent of USD10,000 to a customer for school fee once a year.
Such fee, which shall be transferred from the BDC’s domiciliary account with a Nigerian bank, shall be paid directly to the school,” the proposed Central Bank of Nigeria (CBN) guideline said.”
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CBN said sale of foreign currencies to the intending travellers would have to be accompanied with their bank verification number (BVN) or tax identification number (TIN), duly completed e-form, valid international passport, valid visa, as well as valid international return ticket.
In addition, for BTA, the apex bank said letter of request from the corporate body stating the purpose of the visit addressed to the processing BDC, as well as certificate of the business registration or incorporation, must be submitted by customers.
Also, the CBN mandated that letter of invitation from the customer’s overseas business partner and tax clearance certificate, be presented by the customers.
“The amount of foreign currency sold and date of sale shall be endorsed on the passport. A photocopy of the documents, forex endorsement page and sales receipt shall be filed in a sequential order by the BDC,” CBN said.
‘$5,000 for Medicals bills’
CBN also said BDCs may sell foreign currency up to the equivalent of $5,000 to a customer for medical bills once a year.
Such bill, CBN said, shall be transferred from the BDC’s domiciliary account with a Nigerian bank.
“It shall be paid directly to the hospital and supported by valid visa, duly completed e-Form A, letter of reference from a specialist doctor, or a specialist hospital in Nigeria, and valid international passport,” the apex bank said.
Other necessary documents listed by the financial regulator include valid air ticket, and letter issued by the overseas specialist doctor stating the cost of treatment.
According to the apex bank, BDCs may sell foreign currency up to the equivalent of $10,000 to a customer for school fees once a year.
“Such fee, which shall be transferred from the BDC’s domiciliary account with a Nigerian bank, shall be paid directly to the school and supported by the following documents: duly completed e-Form A, evidence of admission/course programme, valid air ticket, and letter issued by the overseas specialist doctor stating the cost of treatment, and school bill/invoice,” CBN said.
“For post-graduate studies, photocopy of first degree certificate or its equivalent/certified true copy of statement of result by the awarding institution.
“The CBN may review the amounts and frequencies for sale of foreign exchange from time to time.”
A beneficiary of foreign currency sale may receive up to 25 percent of the foreign currency in cash, according to the CBN, and the remaining 75 percent shall be transferred to the customer electronically (to the customer’s Nigerian domiciliary account or prepaid travel card).
Obi, Ekekwe warn CBN
Obi advised government agencies involved to desist because the BDCs aren’t the root cause of fluctuations in the Foreign exchange market neither are they responsible for the fall of the Naira.
Obi said in his X handle on Sunday, that the action is primitive goes to show a poor understanding of the problems.
The LP presidential candidate wrote, “The recent reported attacks and disruption of the business activities of Bureaux de Change (BDCs) operators in different urban centers across the country by Government Agencies, are ill-advised and wrongly directed.
“Rather than solve the problem, the action will further escalate and worsen the exchange rate situation in the country.
“The BDCs are not the primary suppliers of forex nor do they create demand. They only provide a market to sellers and buyers of foreign currency.
“They are part and parcel of every economy and can be found even in the developed economies of the world.
“To think that the BDCs are the cause of the declining value of the Naira is a smack on rational economic thinking.
“The only way to shore up the value of our currency is to move the country from consumption to production, especially export-led production, and fight corruption, which allows unproductive money to pursue the available supply of foreign currency.
“As long as Nigeria remains an unproductive economy and corruption continues unfettered with people in possession of unproductive excess cash, the value of our currency will continue to depreciate.
“It’s important therefore that government authorities properly understand the workings of a modern economy and channel their efforts accordingly, and stop ridiculing the nation in the eyes of global economies.”
Also, Ekekwe in his X handle wrote ”Similarly, the guideline highlighted the imposition of a limit of $5,000 per annum for foreign currency transactions for medical bills abroad.’ Good People, I am not aware of any decent university in the United States which charges $10k per year. So, if that is the case, does this policy hold water? Sure – the central bank has to initiate an action. Things have changed.”
The professor recalled ”When I began in FUTO, the Center for Erosion Studies in the university was manned by Germans, and we had a fair decent number of foreign students. But over a series of strikes, the Indians, Nigeriens, Cameroonians, etc all left. Today, here we are…very unfortunate. Yet, I do not think BDCs are the root cause of this FX paralysis.
”The root cause is that Nigeria is floating Naira which is a bad policy. We can ban Binance, restrict BDCs, etc but until we can earn US dollars, the Naira will continue to struggle. The problem we’re having is not distribution-related, but structural, and that means if we close all distribution channels, and refuse to reduce DEMAND (foreign schools, hospitals, toothpicks, etc), the core drivers of the paralysis, the Naira will continue to fade,” he added.
