Association of Bureaux De Change Operators of Nigeria (ABCON) has said that the unification of exchange rates is necessary to maximise the economic benefits of increased remittances inflow into the economy.
While commending the recent policy measures introduced by the Central Bank of Nigeria (CBN), to improve inflow of remittances, by allowing beneficiaries to collect proceeds in foreign currency, ABCON noted that, “the fundamental problem is not the payment of foreign currency to beneficiaries but a fallout of multiple exchange rates in Nigeria’s foreign exchange market.”
The Association stated this in its quarterly economic review for the Fourth Quarter of last year (Q4 2020), stressing that without the unification of the multiple exchange rates across the forex market, the increased inflow of remittances may be vulnerable to capital flight and hence make limited impact on the economy.
“A quarterly survey carried out by ABCON revealed that a large percentage of beneficiaries require Naira for domestic commitments in Nigeria. Upon collection of foreign currency cash or drawing from their Domiciliary accounts as the policy provided, they do the conversion usually unofficially where the exchange rates are higher. Though the authorities are able to capture figures of the inflows from the data of the International Money Transfer Operators (IMTOs) for statistical purposes, utilization of the foreign exchange may still flow into the unofficial/ informal sector for capital flight and other uses not marginally expedient for the growth of the forex market.
“Thus, a major policy trust should focus on unification of exchange rates and diversification of the operational base to achieve a competitive outlook.”
In the same vein, ABCON also called on BDC operators to pursue full automation of their operations for greater transparency and participation in the remittances market.