Partisan politics and the desperation to continue to embarrass the administration of President Goodluck Jonathan have been identified as the motivation behind last week’s resolve by the House of Representatives to shoot down the new policy on Bureaux De Changes, BDCs, rolled out by the Central Bank of Nigeria, CBN penultimate week. Central to the policy is the requirement for operators of BDCs to increase the capital base of their firms to N35million each.
But while in plenary last week, the lawmakers voted to summon the new CBN Governor, Mr. Godwin Emefiele, to explain the need for the new policy even as they passed a resolution asking him to stop its implementation forthwith.Following a motion by Ibrahim Gusau, who argued that the new policy would send most of the operators out of business thereby increasing the national unemployment rate and heightening the insecurity risk in the country, the House voted to suspend the policy which members tagged “elitist and racist in nature,” pending the governor’s full briefing to the House.
Indications at the weekend showed that reasons other than economic growth underscored the position of the House on the new BDC policy.
Lawmakers’ agenda
Experts in foreign exchange trade and the intricacies involved told Nigerian Pilot that there was no basis for the resolution of the Lower House. They punctured all reasons advanced by the lawmakers describing them as self-serving and representative of “some unpatriotic interests.”Obaseki Jerome Obasuyi, a financial consultant on Broad Street, Lagos said the resolution of the House was uncalled for. “The resolution was uncalled for. I watched their debate on the matter. It was all slanted to do the bidding of certain interests. The CBN must stand its ground. The Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 17 of 1995 and the BOFI Act of 1991, vests in the apex bank the power to license and regulate Bureaux De Change, BDC, operations in Nigeria. And in pursuance of that, the CBN has rolled out that policy. So, what’s their worry there? To me, Nigerians must look beyond the arguments the lawmakers put up to know the main reason behind this rather bizarre resolution.”
For the Head, Foreign Exchange Department of a major commercial bank in Abuja, who did not want his name in print, the action of the House is “strange.”
The banker wondered why the lawmakers suddenly picked interest in the new policy, asking why they did not react when the capital base of banks was increased which caused the reduction in the number of banks in the country.
“Yes. One of the first thing the former CBN governor, Sanusi Lamido Sanusi did when he assumed office about five years ago was the pruning down of the number of banks by upping the capital base applicable. Today, the industry is stronger for it. What about the PMIs? A similar thing was done and Nigeria is better in that sector. Now the politicians in the National Assembly do not want the attempt to do same to the BDCs to succeed. They must have an agenda.”
Beyond the foregoing, a chieftain of All Progressives Grand Alliance, APGA, who stormed the Abuja office of Nigerian Pilot to protest the resolution of the House, gave political reasons to the action of the lawmakers.
He was not comfortable with the “obvious fact that only members of the opposition parties in the House spoke against the policy.”
“Many Nigerians know what they are up to. Did they summon Sanusi to explain his policy of seizing the licenses of banks or why he refused to comply with court rulings that ordered him to reopen some banks? Because this policy on Bureaux de Change will affect a section of the country and because most of them are front men for big time businessmen who are mostly aligned with other political parties except the PDP, they want to stop it. That is wickedness,” he said.
Justification for new policy
Nigerian Pilot gathered that before rolling out the new policy, CBN examiners discovered that majority of the BDCs in the country could not be located, had no accounting records and some relocated from known addresses without approval. Majority too, had no sales documents which would facilitate inspection, rating and accounting.
It was further learnt that CBN investigators found out that a high percentage of BDCs sell over the approved maximum 2% margin allowed by relevant guidelines while some were involved in clear cases of sharp practices.
Furthermore, it was learnt that the Nigeria Customs Service (NCS) has continuously reported cases of direct export of foreign exchange, particularly dollars, through the airports even as they noted that 121 out of 130 BDCs (93%) sampled were discovered to have breached the guidelines recently.
Other grounds for the BDC new policy which have been applauded by experts include:
*Weak and ineffective operational structure, resulting in the sub-sector completely abandoning the objectives for its establishment;
* Depletion of the country’s foreign reserves, in view of the unusually large number of BDCs;
* Potential financing of unauthorised transactions with foreign exchange procured from the CBN window;
*Gradual dollarisation of the Nigerian economy with attendant adverse consequences on the conduct of monetary policy and subtle subversion of cashless policy initiative; and
*Inadequate level of minimum paid-up capital. The required minimum paid-up capital of BDCs is set at N10 million. While the capital requirements of all other CBN-regulated entities have been reviewed upward over the years, the one for BDCs has remained the same; and
*Prevailing ownership of several BDCs by the same promoters in order to buy foreign exchange multiple times from the CBN window, which is clearly related to the low level of capital requirements for licensing BDCs.
Source: Nigerian Pilot
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