The Association of Bureau De Change Operators of Nigeria (ABCON) has raised the alarm over the country’s foreign exchange situation.
Its President, Mr. Aminu Gwadabe, who disclosed this during a live programme on Channels Television, Business Morning, monitored in Lagos yesterday, said the forex crises was as a result of massive speculation, hoarding and panic buying, which has put the currency under serious pressure.
He declared that about $3 billion was waiting to be wired offshore by investors should the pandemic disappear and economic activities resume fully.
He stated that supply from other sources and Central Bank of Nigeria (CBN) has reduced drastically .
He lamented that a lot of Nigerians have lost confidence in the value of the Naira and are currently in a panic-buying mood.
‘‘Most Nigerians have overnight suddenly become Bureau De Change operators with many exchanging their Naira for Dollars, believing that the Naira could be devalued anytime soon. Another troubling aspect is that some SMEs have shut down their businesses and exchanged the proceeds for Dollars and now trading in currency exchange’’
He warned that this remained an unhealthy development for the economy because such actions were putting undue pressure on the Naira.
He regretted that financial forecast of the economy predicted that Diaspora remittances would be down by 20 per cent, adding that investors are checking out while crude oil prices are also at an all-time low.
He said despite the coronavirus pandemic which has slowed down economic activities, Nigerians were still in need of foreign exchange to pay for their wards schools fees and upkeep abroad while others need same for medical bills.
He said the lack of Diaspora inflow into the economy and the suspensions of inbound international flights have all combined to limit the sources of forex for BDC operators.
The ABCON boss warned against disparity in the country’s exchange rate, saying no country can afford to fold its arms and watch its currency slide into a massive free fall.
He noted that there cannot be a different rate for the same product, saying the way to go remains a unification of the country’s exchange rates in order to move from price volatility to price stability if the economy is to be prevented from total collapse.
‘‘There have been a lot of criticisms against the multiplicity of the country’s exchange rate regime. Government and all those concerned must work to remove all the barriers hindering the attainment of a unified exchange rate figures.
“There are a lot of questions about distortions, transparency and resource allocations. But if all the rates are unified, all these cynicism about the exchange rate will be automatically removed, thereby shutting the doors against rent seekers who thrive on hoarding and speculative buying of currencies.
Gwadabe decried the activities of rent seekers in the forex market, saying their continued presence portends grave danger because they are not adding value to the economy.
The ABCON boss charged government and its regulatory agencies to look outside the old wine bottle on to a new wine bottle, saying forex inflow may not happen anytime soon because every country and investors are hoarding same due to the coronavirus pandemic. He challenged government to think outside the box and look towards other sources of foreign exchange inflow, especially the Diaspora remittances.
‘‘This is a creative destruction period. We need to look into our Diaspora remittances. What are the challenges? Why are we not receiving the exact $29 billion Diaspora Remittance into the economy per annum which is far more than the receipt from crude oil per annum.”