ABCON asks CBN to review regulations on domiciliary accounts to stop FX hoarding

Aminu Gwadabe, president of the Association of Bureaux de Change Operators of Nigeria (ABCON) said the Central Bank of Nigeria (CBN) should review the regulations on domiciliary accounts to eliminate hoarding of foreign currencies.

Gwadabe spoke with TheCable on the recent policy recommendations by the presidential committee on fiscal policy and tax reforms, on Tuesday.

BRIEF BACKGROUND

The federal government’s tax committee, led by Taiwo Oyedele, a fiscal policy expert, had proposed 20 ‘quick wins policy recommendations‘ in a bid to improve the foreign exchange (FX) market and eliminate volatility in the system.

President Bola Tinubu, while receiving the report, approved the recommendations and directed an immediate implementation across ministries, departments, and agencies (MDAs) in the country.

One of Oyedele’s proposals was the incorporation of the Bureau de Change (BDCs) operators into the FX window, as well as digitalise the FX regime to reduce hoarding.

The reforms are expected to close the gap between the official and parallel market rates, leading to a “fair price” before the end of 2023.

‘OVERDUE POLICIES’

Reacting to the development, Gwadabe said the incorporation of BDCs into the official market ought to have been done together with the unification of all trading windows by Nigeria’s central bank.

“When you liberalise the market, then there is a need to also centralize the market, by way of allowing most, especially the licensed participants to operate in the market. And so it is long overdue,” he said.

“That was supposed to have come up when the CBN came up with the unification of the market, which will go a long way in helping to boost liquidity in that market.

“So, excluding BDCs has a very negative impact because we play significant roles in moderating and also correcting the exchange rate in the market. The policies are in line with our advocacy that BDCs should not be excluded in the scheme of things.” 

Gwadabe also said the policy of digitalising the FX market is a welcome idea for the association.

“Most of our operations have been online. So we are ready for that journey and we have started already,” he added. 

The ABCON president commended the apex bank on the recent policies implemented to improve the FX market and boost liquidity.

He said the policies will go a long way in ensuring that people have confidence in the market.

“Also, I believe that if some of these measures have been proposed to be taken, now that we have started seeing confidence in the local currency, we should not take a long time in the struggle we have implemented so that we can maintain the tempo,” Gwadabe said.

Gwadabe also said the strict regulation on domiciliary accounts should be reviewed.

“In other countries like South Africa, you do not keep dollars in your dorm account without any purpose or any use for it. There should be limits on frequency and also limits on balance of how much you can keep and how long you have to keep that,” he said.

The ABCON president said this move would discourage the hoarding of foreign currencies and stop scarcity.