Banks have begun intensive scramble for Bureaux De Change (BDCs) accounts after their efforts to stop the operators from accessing the Diaspora-related foreign exchange (Forex) failed at the weekend, it was learnt.
Sterling Bank Plc at the weekend announced the launch of the Sterling Diaspora Services for Nigerians based abroad.
The bank said it was discussing with various Nigerian communities abroad for business collaboration in the area of customer acquisition, management and retention.
The mid-tier lender said Nigerians living abroad with local and direct ties in Nigeria would be encouraged to embrace the services. “We will also ensure that businesses owned by Nigerians and Associations abroad make use of the services,” it said in a statement obtained by our correspondent.
It was also learnt that more lenders will in the coming weeks, strengthen their international operations and marketing networks, to ensure that more funds from the Diaspora come into their coffers.
The banks last Friday, after nearly three weeks resistance, began implementation of the Central Bank of Nigeria (CBN) directive to sell $30,000 weekly to BDCs. Four bank sold over $10.5 million to 350 BDCs.
First Bank of Nigeria Limited, Ecobank Nigeria Limited, Fidelity Bank Plc, and United Bank for Africa Plc, sold forex to BDCs that met set requirements and were cleared by the compliance department of the banks as fully compliant with the Know Your Customer requirement.
More BDCs are expected to benefit from the Diaspora-related forex funds estimated at $21 billion annually.
In a continued effort to ensure stability of the exchange rate and to encourage participation of all critical stakeholders in the foreign exchange market, the CBN had directed through a circular to authorized dealers that all agents to approved International Money Transfer Operators (IMTOs) sell foreign currency accruing from inward money remittances to licensed BDCs.
“The process started with two banks: First Bank of Nigeria Limited and Ecobank Nigeria Limited, but now, several other banks are even calling our members to come and open accounts with them. The banks are pleading, telling them, I am on board, please come and open accounts. I am sure that in the next one or two weeks, all banks will be involved in selling to our members and all the BDCs will have access to funds. And before you know it, we will begin to see stability in the market,” Aminu Gwadabe, President, Association of Bureau De Change Operators of Nigeria (ABCON) said in an exclusive interview at the weekend.
He said the international money transfer fund is not CBN’s money. “It is not from the foreign reserves of the CBN. This is money that Nigerians in the Diaspora are sending into the economy. Before, this money came through unofficial means, some sending through hands, and at the end of the day, the beneficiary will not even get the money. Some use black market operators,” he said.
Gwdabe said there are many Nigerians in the Diaspora who want to send their money home and the banks see the opportunity in the transactions.
“They have seen that the CBN circular is sacrosanct. So, you either belong, or you seem to be committing and infraction one way or the other. So, to avoid that, you definitely have to follow. The circular has been there since 2014, it is only enforcement that is taking place now. The BDC sub-sector is big in Nigeria. Imagine if you are doing $30,000 weekly, for 3,000 BDCs, you are talking about almost $100 million, and multiplied by say N300 to dollar exchange rate, that is about N30 billion weekly and monthly that is over N120 billion, transactions in the BDCs sector. No economy can ignore that,” he said.
The ABCON chief said the banks have also began international marketing to ensure that more funds from the Diaspora come to them.
Speaking further on why the Diaspora funds are critical, he said the inflow will make the naira stronger. “First, it will make the naira sovereign. The sovereignty of any currency is critical to the sovereignty of the country. American is a world power not because of its ammunition but because every part of the world you go, dollar is like Coca Cola. That is what makes America strong. American has been an export-driven economy; they have their technology and transparent leadership. They have educated working population, and good medical care. Mortality rate low, accident is low, security is there. If we make naira a strong medium of exchange, most especially, in the West African sub region, it will help us to stamp the authority of the naira, not only in Nigeria, but in neighboring African countries,” he said.
Gwadabe said BDCs are not parallel market operators. “There are over one million parallel market operators in this country and they have been here even before the coming of the CBN. They have been here even before the CBN licencing the BDCs in Nigeria. There is a big difference between a parallel market operator and a BDC operator,” he said.
According to him, BDCs all over the world are development agents but it is only in Nigeria that the operators are seen as black sheep in the economy. “In India, the BDCs generate over $30 billion from Diaspora remittances. In United Arab Emirates, the entire needs of banks are met by BDCs. The working of the Lebanon economy is highly dependent on the activities of BDCs in that country. So, you can see the roles of BDCs have played. In Nigeria, the BDCs have been playing a very big bridge for the regulators in terms of ensuring there is liquidity,” he said.