Aminu Gwadabe, president of the Association of Bureau de Change Operators of Nigeria (ABCON), On Wednesday said the BDC will close the gap between parallel and interbank market rates of the naira if the central bank makes it a primary dealer.
Speaking on Business Morning, a programme on Channels Television, Gwadabe said the scenario in the country is not new, explaining that Charles Soludo, former CBN governor, consulted the association in 2006 when a similar situation occurred.
He said the collaboration brought about a solution in less than a month, recommending the same approach to the apex bank.
“Remember, in 2006, we had this kind of scenario, by then the leadership of professor Charles Soludo brought the BDCs into the window, it did not take the BDCs more than one month to crash the rate between the official and parallel market,” he said.
“What we are seeing now has been practised before, it is creating cartel, there is the need to involve larger participants.
“The introduction of the bureau de change will definitely reduce that gap or eliminate it completely. It is easier to say it’s bureau de change that causes the spike, but BDCs have been totally shut from the market.”
Gwadabe said not all banks have what it takes to be primary dealers, alleging that this factor has been causing disaffection among banks.
“Before the kick off on Monday, we were told that only four have qualified. From four to eight, so we are beginning to see some modification,” he said.
“Like I rightly said, not all the banks can meet that standardization, not all the banks can boast of $600 billion asset to make the list. So there is a growing disaffection even among the banks.”
He said the BDCs, which remain a potent tool for closing the gap better official rate and parallel market rate, will be meeting with CBN on Wednesday to discuss the way forward.
“You know there are 3,000 BDCs in Nigeria, we are looking at the possibility, we are talking to the CBN already on how to also secure our primary dealership licence, so we can cater for our members,” he said.
“There is going to be an interactive session between CBN management and the BDC operators on Wednesday, June, 29. There are many reasons why the central bank should allow BDCs to participate in that market. If you look at the present players, they are sharing partners of the central bank.
“The distribution is not potent like the BDC, the convenience is not as potent as that of the BDCs, the potential is not as potent as that of the bureau de change. The BDCs service the critical sector of the economy.
“You want to buy $200, you cannot go to the bank and queue, you have to look for nearby BDC. You just flew into the country at 3am, you cannot see any bank that is operating, the option you have is BDC.”
He said BDCs have contributed over $30 billion inflow to the Indian economy, adding that in Dubai, UAE, it is the Bureau de change that supplies the cash needs of banks.
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