The Central Bank of Nigeria (CBN) has updated the number of Bureau De Changes (BDCs) operating there, confirming 5,687 operating licenses.The CBN website has a list of BDCs in a publication titled, ‘Approved BDCs’, seen on the CBN website.
The CBN on Wednesday said it would come up with a complete list of licensed BDCs operating in the country, contrary to reports on license revocation. Isa Abdulmumin, CBNs director of corporate communications, disclosed this to BusinessDay via phone on Wednesday.
He noted that the reports making rounds about revoking operating licenses of 2,698 BDCs needed to be more accurate. Some reports had said the CBN had withdrawn the license of 2,698 BDCs as it published a list of approved operators, which saw a reduction in the total number of approved BDC to 2,991.
At its last publication of the list of approved BDCs, on December 31, 2021, the number of operators stood at 5,689.
Responding to the development, Aminu Gwadabe, National President of the Association of Bureau De Change Operators of Nigeria (ABCON), said, “It was fake news at the moment”. However, he said the CBN was updating their BDCs register based on compliance criteria in obligations of BDCs return renditions and annual fee payments.
“I, therefore, advise my members to comply and avoid unnecessary sanctions and exclusion of their licenses,” he said. The number of BDC operators in Nigeria has risen by more than 75-fold in 18 years, from 74 in 2005 to 5,687 in 2023, data from the CBN revealed.
The astronomical increase in BDCs resulted from attractive exchange rate premiums.
The exchange rate premium between the official and black market rates is N87.18 as of July 21, 2023. The official exchange rate, the Investors and Exporter’s forex window rate stood at N777.82 per dollar as of July 21, 2023, while the black market rate closed at N865 on the same day.
On what is fueling exchange rate volatility, Gwadabe said, “The activities on the Binance trading platform, which is now the anchor rate, is having a bull run in both the I&E window and the parallel market on the value of our local currency, the Naira.
“The Binance platform, which trades on BUSD electronic money, is borderless and very liquid with over 1.2m transactions per second for over 90 million users, drives and influences our price discovery,” he said.
According to the CBN, a BDC is any company licensed to carry on small-scale foreign exchange business in Nigeria whose sole object is carrying on such business on a stand-alone basis.
The BDC sector has for decades remained a critical component of the Nigerian financial market, playing a pivotal role in exchange rate stability and job creation. The BDCs have supported Nigeria’s growth agenda and the CBN’s commitment to exchange rate stability and regulation for the industry.
Several erring BDC operators have been sanctioned by the CBN and the Association of Bureaux De Change Operators of Nigeria in line with the industry’s zero tolerance for regulatory abuse.
“There are so many of them because of the premium between the official and parallel market rates. The higher the premium, the more attractive it is in that business. The higher the premium, the more they see it as patronage,” said Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise.
According to him, the more the disparity in rate, the more people register, even as some people have more than one licence.
Those who are involved in round tripping are almost overshadowing those who are doing the business as initially construed, he said.
“The growth for me is a reflection of distortion in the market, and this has led to a proliferation of the BDCs, as many are there for round-tripping,” he said.
