Market News

By : Joseph Chibueze, Abuja

The President of the Association of Bureau De Change Operators of Nigeria (ABCON), Dr Aminu Gwadebe, has blamed the illiquidity of foreign exchange (FX) on some Nigerians who keep dollar cash in their homes.

Gwadebe stated this in a chat with The Guardian on Wednesday, saying about 91 per cent of dollar in circulation in Nigeria is outside the banking system.

He noted that the situation is compounded by the uncertainty surrounding the inability of most of the BDC operators to meet the CBN recapitalisation deadline at a time the naira hovering around the N1,600/$1.

He said because of inflation and naira volatility, a lot of Nigerians prefer to hold their savings in hard currencies in their vaults rather than in the bank.

It has been observed that many Nigerians are hoarding the dollar waiting for when the naira falls to sell, thus causing artificial scarcity of dollars.

He said the country has no reason to suffer dollar scarcity as there is enough inflow of dollars into the country and called for a collaborative effort between the association and the Central Bank of Nigeria (CBN) to unlock the liquidity.

Gwadebe said using the global statistics of diaspora remittances alone, which is estimated at over $25 billion yearly and Nigeria’s official statistics of about $6 billion, it is not difficult to know what the figures should be.

“There is huge unaccounted liquidity in the system to be tapped with a cohesive strategy between the CBN and ABCON. We understand and appreciate the paucity of liquidity, but I am hopeful that collaborating to harness the hanging fruits available is worth a while,” he said.

The ABCON President said the association is ready and prepared to share skills, techniques and professionalism for a better sub-sector.

“We are not only looking at a CBN-calibrated intervention, but other sources already provided in the guidelines,” he said.

He said India, UAE, China, Lebanon and Pakistan rely heavily on diaspora remittances, with India raising over $30 billion yearly through the window for infrastructure.

He commended the leadership of the CBN and its use of strict enforcement of the rules, which he said has brought some measure of sanity to the FX market.

To address the challenge posed by informality, he said: “Friendly regulatory policies will make regulation less cumbersome.”