ABCON: CBN’s cash withdrawal policy fuelling rush for dollars

The Association of Bureaux De Change Operators of Nigeria (ABCON) says the cash withdrawal policy has led to a rush by Nigerians to buy dollars.

The Central Bank of Nigeria, on Tuesday, announced a restriction on the maximum cash withdrawal over-the-counter (OTC) by individuals and corporate organisations per week to N100,000 and N500,000, respectively.

The new policy will take effect from January 9, 2023.

In a phone interview with TheCable on Thursday, Aminu Gwadabe, ABCON president, said demand for the greenback has surged since the policy was announced.

He said the dollar demand piled pressure on the naira, which according to him, caused the local currency to drop to N750/$ at the parallel market in Lagos.

“One of the unintended consequences of the cash withdrawal limit is the return of public rush to substitute their naira to greenback which is putting pressure on the exchange rate of the local currency before the effective date,” Gwadabe said.

Asked if the new policy would affect the livelihood of the association’s members, Gwadabe expressed optimism that the BDC operators would remain in business.

He said that even before the policy was introduced, most BDC operators use mobile banking and alternative payment channels.

“ABCON, as a proactive organisation, has embraced digitalisation of our members’ business model and operations since 2016,” Gwadabe said.

“Several payment apps were designed in collaboration with the CBN, banks like RTGS, SAAZ MASTERS etc to automate the official licensed BDCs exchange payment method.

“In view of our business vulnerabilities to cash transactions to arm robberies and other predicated crimes, we have always collaborated with the apex bank to mobilize our members in embracing cashless policy since its inception.

“Honestly, there is a lot of influx of online naira payments in exchange for the cash dollars in all the major cities of Nigeria even before the new naira redesign policy of the CBN.

“Ironically and painfully the licensed BDCs are losing to the new practice mostly controlled by ungoverned operators due to their incapacitation as a result of inhibitive policies.”

The ABCON boss further expressed concerns about the impact of the policy on the unbanked population who have no bank account and lack access to banking services.

“However, we can also not underscore the involvement of the traditional cash base nature of our economy as over 40 million Nigerians are unbanked,” Gwadabe added.

“The limit on cash withdrawal will discourage the use of cash but is not sufficient to address the challenges inherent in the cash base sub-sector.

“The CBN needs to embark on a lot of sensitization and stakeholders collaboration to achieve effective results.”