By Dickson Okafor
Onyeka Ifekandu, Chairman/CEO, Mac-Akudiufu Nig Ltd , has faulted the Central Bank of Nigeria’ s (CBN) decision to halt foreign exchange (forex) sales to Bureau De Change (BDC) operators in Nigeria.
He blamed it on high exchange rate and inflation in the country, hence he called on CBN to reverse its decision to avoid further rise in inflation which has already brought untold hardship to Nigerians.
He said travelers and importers depended on BDC for foreign exchange since banks could not meet the high demand of foreign currencies.
Excerpts:
Did you expect the decision of the Central Bank of Nigeria (CBN) to halt foreign exchange sales to Bureau De Change operators as one of the key players or did it come to you as a surprise?
It came to me and to my colleagues as a shock because we didn’t expect such decision from the Apex bank. Within few hours of the decision by the CBN to suspended sales of foreign exchange to BDC, dollar rate and that of other foreign currencies has increased in Nigeria. They indicted BDC as the cause of dollar inflation which is not true. It is all about demand and supply and you give BDC operators less dollar when the demand is more and expect the rate not to increase, hence that is the law of demand and supply. If demand is higher than supply, of course there must be increase in prices of goods and services and it may cause inflation. So, CBN is acting as if it does not know the cause of high rate of dollar and other foreign currencies in the country. If CBN give BDC operators $10, 000 once in a week which is far less than the number of people that needs dollar it cannot saturate the demand of the people that needs it because of their daily businesses, then dollar must be scarce and the rate will increase. They say dollar is N502 to N503 and BDC operators are selling higher thereby causing inflation which in turn makes the rate of dollar to skyrocket. The question is, why can’t the banks make dollar available enough to go round? The poor masses are the ones suffering hence some corrupt bank officials see it as an avenue to enrich themselves. This is so because not many people can meet the bank requirements to be given dollar especially those travelling.
You mean with the suspension of sales of forex to BDC operators, CBN cannot meet foreign exchange demand?
What is the assurance that banks will issue dollars to as many travelers and international businessmen and women that needs forex? Because for the past two months or more, some of us have paid waiting for the banks to issue us dollar, but we are yet to get it until their recent decision to halt sales of foreign exchange to us. However, going by the trend is like the rate will get to N1000 to a dollar very soon. Don’t forget that BDC license is transferable, yes, you can transfer it. There are people that bought the license last at the rate N10million. CBN recently issued licenses to over 40 people and their survival depends on it and suddenly the CBN jettisoned the process. What kind of country are we? Some people sold their properties to get the license and the CBN just woke up and said they are no longer issuing licenses and those who are yet to get their licenses would be refunded their money. That is breach of contract and they may sue the CBN. In terms of employment, BDC has contributed to job creation in Nigeria because one Promoter has over 10 workers. What is the fate of these workers who have families to feed? Most of them are graduates who should be making contributions towards national development. Rather than consider all these factors, CBN abolished the licenses it issued BDC operators. It is unfair. I stand to be corrected, Bureaux De Change Promoters has over 20 million workers all over , hence e country and CBN did not put this into consideration. We just woke up and we heard that a circular dated July 28, 2021 had been issued by central Bank of Nigeria through the Financial Policy and Regulation Department of the Apex bank ordering a refund of minimum capital deposits and licensing fees to Bureau De Change Promoters with pending license applications. This is unfair.
But majority of Nigerians including financial experts have hailed CBN decision to stop issuing foreign currencies to promoters of Bureau De Change in the country hence according to the apex bank this is to curb inflation?
No doubt, inflation rate has risen to 17.16 per cent in June 2021 from 17.36 per cent in May 2021 according to National Bureau of Statistics (NBS). However, NBS also reveal that Nigeria’s inflation drop to 17.75 per cent. It says the consumer price index (CPI) which measures inflation or rate of change increase in prices and also recorded increase by 17.75 per cent year-on-year in June 2021. Having being privilege to live in Nigeria in the past till date, I haven’t seen this kind of inflation. It is unfortunate that the government so far is not doing anything meaningful to ease the sufferings of the poor masses. It is also affecting businesses and end users in the country. Therefore, it is not the fault of the BDC operators as insinuated by the CBN. Like I said earlier, CBN issues BDC just 10 million dollars in a week and if you compare it to the number of people scrambling for foreign exchange; you will realize that the amount is just a drop of water in ocean. Travelers and importers are forced to source for dollar by all means thereby forcing the prices of goods and service to go up. I want to call on government to arrest the rising extreme poverty in the country. Government must as a matter of urgent importance heed to the advice of international institutions on the need to reduce poverty. Oil which is our economical mainstay can no longer sustain the nation’s economy hence the need for diversification into agricultural because the financial policy is not favourable to economy. Again, it is the masses that are suffering most because they are the end user and the importer won’t sale at a lost, he has to make profit.
You made mention of high inflation rate in the country, which way can inflation be reduced in Nigeria?
Those in charge of the nation’s financial sector should shun their personal interests and ensure our collective gains in the management of the country’s fiancés. The decision by CBN to stop issuance of foreign exchange to BDC operators is wrong and should not only be reverse, but the CBN should increase the volume of foreign exchange issued to us. At least the CBN should increase it to $10 or $20 thousand weekly so that we could meet the demand of travelers. It is the scarcity of foreign exchange that pushes up the prices of goods and services. So, to me, the CBN should reverse its decision on BDC and increase the volume of foreign exchange issued BDC operators to $10 thousand daily and if add it up it will give you $50 thousand weekly hence that can serve a reasonable number of travelers and importers who are in need of foreign exchange and that also will force down prices of goods and services.
Government has attributed COVID-19 pandemic as the major cause of inflation?
COVID-19 pandemic is a global menace that affected not only Nigeria’s economy, but world economy. What I’m saying is that government should find a way to cushion the effect of the pandemic on ordinary Nigerians and one of the ways is for them to sustain the availability of foreign exchange through supply of foreign exchange to BDC operators in order to meet the demand of travelers and international businessmen and women and by so doing attract Direct Foreign Investment. As a licensed operator, I know where the shoe pinches BDC operators. Government must ensure that there is equilibrium by making sure that supplies of foreign exchange meet the demand.