BDCs Allege Banks Benefit From Their Losses
Bureau De Change (BDC) operators have said they are badly affected by the trending “uncompetitive rate”, which comes as the Central Bank of Nigeria (CBN) sells dollars to them at higher rate compared to what it sells to commercial banks.
According to them, the development is made worse as the BDCs and financial institutions target the same market segment and customers, leading to their losses.
Consequently, no fewer than 700 operators have in recent months been rendered inactive in CBN’s arrangement, alleging that it has put the sustainability of their businesses under serious threat.
Reacting to the development, the President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said BDCs buy dollar from the CBN at N360/$1 and sell to end users at N362/$1, while the regulator sells to commercial banks at N358/$1 and the banks sell to end users at N360/$1, which affects them badly.
The CBN’s approved list showed that 3,389 BDC operators have been licensed to carry out the business, and are expected to get $40,000 allocations weekly from the CBN Forex Window.
The apex bank disburses about $135.5million to the 3,389 registered BDCs on weekly basis to sell to end users – Personal Travel Allowances (PTA), Business Travel Allowances (BTA), medical tourism and school fees abroad.
Gwadabe described the buying rate for the BDCs as uncompetitive, and a big disincentive for many forex users to patronise the operators in the same market segment, adding that they should get dollars at the same rate to enable both institutions compete favourably.
He noted that banks enjoy large customer base with the customers able to carry out their transactions by having their accounts debited to cover the cost of purchase, saying that such convenience plus a lower rate put the banks at advantage position to attract more customers than BDCs.
Some of the operators, who pleaded anonymity, also lamented that BDCs are not only buying at exorbitant rate, but also sell at rate higher than that of the banks hence, creating low patronage for them.
They called for urgent steps to review the rate at which the dollar is sold to the BDCs as such would boost ongoing recovery of the naira against dollar, which currently is at N368/$1 at the parallel market.
