Business

MAN: Keeping fate with CBN’s decision on BDCs

With the Bureaux De Change (BDCs) operators pressurising the Central Bank of Nigeria (CBN) to reconsider its decision in order to stage a comeback to the forex market, the Manufacturers Association of Nigeria (MAN) has expressed its satisfaction with the BDCs remaining banned by CBN. TAIWO HASSAN reports

It has been lot of challenges facing the country’s foreign exchange (forex) market since the eruption of COVID-19, which plummeted prices of crude oil at the international market, thus making Nigeria to recorded low revenue earnings from its sales. In fact, it has been tough for CBN in managing the country’s monetary policy due to the demand for FX by various sectors of the economy to remain in business. To overcome the pressures on the country’s banking industry regulator, the apex bank decided to carry out different monetary policies meant to stabilise the FX regime with the aim of ensuring FX goes round every sector to improve the fragile economy. The apex bank must be commended for the way it handled the forex scarcity issue, coming out with different monetary approaches in terms of distribution. The most recent in this regard being the pronouncement on August 24, this year, that it had stopped BDCs from trading in dollars over some infractions. Since then, there has been relatively no peace in the country’s forex regime with volatility, scarcity, hoarding, arbitrage and round tripping being the order of the day as the exchange rate is skyrocketing on a daily basis. This is despite giving it to the commercial banks to be in charge as the sole forex distributors.

BDC opearors’ stance

Following the fallout of handling the FX distribution by commercial banks and the different reports trailing exchange rate increase and scarcity in the country, the Bureau De-Change operators, under the umbrella of Association of Bureaux De Change Operators of Nigeria (ABCON), urged CBN to have a rethink about the association’s suspension. ABCON said the recently implemented policy, which suspended the issuance of foreign exchange (forex) to the Bureau De-Change operators, had not brought any succour to forex distribution in the country, but rather increased the cost of naira to dollar exchange. ABCON President, Alhaji Aminu Gwadabe, who disclosed this in an interview, said that reality checks had shown that since the Bureaux De Change Operators were suspended from FX participation, the country’s naira has been falling sharply. Gwadabe explained that naira had further lost value to the dollar since the CBN started the implementation, urging the apex bank to reconsider its stance for the sake of saving naira. He noted that ABCON’s concern is that when CBN came up with such decision to suspended its members, they knew that it would come with lots of FX challenges.

CBN’s stance on BDCs ban

However, despite naira’s free fall against the dollar at the in-ter exchange market, the apex bank insisted it won’t give dollars to BDC operators because they are promoters of terrorism. The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, said that some people were collecting dollars from Bureau De Change operators for the purpose of importing weapons into the country in order to harm Nigerians. He said this while speaking at the end of the Monetary Policy Committee meeting held at the apex bank’s headquarters in Abuja. He said that CBN decided to stop the sale of forex to Bureau De Change operators because they have become a source of foreign exchange for criminals to perform their nefarious activities. The CBN governor said: “It truly beats my imagination that Nigerians continued with this type of practice (selling dollars to BDCs) that tended to promote illegal activities who are involved in graft and corrupt practices. “We won’t support the corrupt tendencies of those who illegally buy dollars from our forex market, carry them in aircraft, buy arms and ammunition and bring them back into the country and conduct crimes. Whether it is Boko Haram, banditry and other nefarious activities. “Why will CBN give people our forex to go and buy arms? And that is what people want us to continue to do. We cannot do that. What we are saying is that if you have any legitimate need for forex, take it to the bank and they will sell you forex.”

MAN on BDCs’ ban

Going by the insistence of the Emefiele-led CBN to edge out BDCs from FX sales and distribution, the National President of Manufacturers Association of Nigeria (MAN), Mansur Ahmed, expressed the support of the association to CBN’s decision to stop sale of FX to BDCs. The MAN boss, who lamented the negative effects of the unscrupulous activities of BDCs on the manufacturing sector, said though the CBN policy would temporarily hike the exchange rate, this would be temporary and, at the end, the country’s economy would be better for it. Ahmed stated that foreign exchange was not a commodity that should be taken to the market and traded. He said: “The decision of CBN to withdraw supply of foreign exchange from the Bureaux De Change is one that the manufacturing sector is fully in support of. “Foreign exchange is not a commodity that should be taken to the market and traded. Its availability is intended to allow those that are producing goods and services to bring in the necessary materials and equipment required in order to produce those goods and services at affordable prices.” According to him, the recent move by the Central Bank of Nigeria to block forex sales to the BDCs was unanimously supported by the association as it would eliminated excesses of middlemen, save the value of naira and allow available forex to be allocated productively, using the official banking protocols. The MAN president explained that the dominance of FX market by BDCs had an unpleasant implication for the manufacturing sector. To him, manufacturers source forex at the BDC window at exorbitant cost, notwithstanding the implication on cost of production and competitiveness of the sector.

Last line

Local manufacturers may have kept fate and supported CBN for not bringing back BDCs, but many of them are not still happy with the current exchange rate price of N560/$.

 

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