Traders, Bureau de Change (BDC) operators and experts Wednesday lament implications of the new Central Bank of Nigeria (CBN) policy closing the forex bid window for BDCs in the country, fearing job loss and spike in inflation figures.
With mounting pressure due to the dollar scarcity, analysts said the new policy will push up already the worsening inflation figures.
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The Naira Wednesday recorded a sharp fall as a result of the shock from the new policy. The currency loss between N8 to N22 in the parallel market monitored in major cities around the country.
Checks by our correspondents show that most banks visited either had no forex desks, or the desks were not operational to satisfy customers’ needs, contrary to the directive given by the CBN Governor, Godwin Emefiele, while announcing the new policy on Tuesday.
Mr Emefiele had said that the apex bank would henceforth channel the $100 million allocation to the BDCs through the commercial banks, as he directed the banks to ensure all eligible persons have access to the currency.
Checks by our correspondent at the BDC market around Wuse Zone 4 Abuja showed that the dollar has spiked as the CBN announcement induced immediate scarcity of forex.
One of the BDC operators identified as Samaila said the Naira lost N8 to the dollar. He said before the announcement, the BDCs were buying a dollar at N502 but a day after the announcement, the dollar climbed to N510 for one.
He said the CBN sudden announcement led to a spike in the market because even individuals were not selling to BDCs.
Another BDC operator at Zone 4, Alh. Nura said immediately after the announcement, the Naira fell to N525 / $1 but by today (Wednesday) it made a slight gain to N520 at the BDCs.
He said: “The dollar is very scarce now. We hardly get it. Yesterday, it went to N526 but today (yesterday) it’s N520. I bought N520,” he said.
According to him, the Naira would likely fall further because of demand and supply variables.
According to Nura, he’s already wondering what is going to happen to his staff.
“If the market continues like this, I wonder how I will pay my staff. It’s a huge dilemma for us” he said.
The businessman said the CBN should have consulted with the BDCs before handing down such a drastic policy, predicting that the Naira will further crash.
In Kano, dollar at the parallel market shot up immediately after the announcement of CBN’s cancellation of sales of forex to the BDCs, Daily Trust finds at the popular Wapa Forex Market revealed.
It was gathered that before the announcement on Tuesday, a dollar was being sold at N505 but went up to N520/dollar by evening and started at N525/dollar Wednesday morning but dropped to N518/dollar by Wednesday evening.
Many of the BDC operators at the market expressed worry over the new policy, saying the directive may render many of them jobless and push most of the young men working with them back into the labour market with attending effect on their dependents.
One of the operators, Alhaji Ashiru Wapa, said the cancellation will present negative effects on their businesses, adding that most of them are currently making consultation on the way out for themselves as it is apparent that not all can operate under the new directives by the CBN.
Another BDC operator at the market, Alhaji Ahmad Sharifai told Daily Trust that their survival in the business lies in the new directives that CBN will issue to commercial banks on forex, adding that many are considering venturing into other businesses.
“WAPA has been a major centre for forex businesses, the centre has witnessed various policies that favour’s it or otherwise. The recent CBN directives on BDC will no doubt pull thousands of people out of business into the labour market, that is why our main concern now is on what directives will CBN give, because our survival in the business depends on that”, he added.
A visit to some of the commercial banks in the state revealed that most of them have already reactivated the BDC desk officers but are yet to commence operation.
A staff of one of the new generation banks told Daily Trust that they were waiting for further directives from CBN on the mode of operations based on the new policy.
Daily Trust call at a number of commercial banks indicates that activities are progressing as usual as there was no visible rush for dollar.
Staff who spoke to our reporters under the condition of anonymity said: “We have always had staff dedicated to forex transaction, whether it is buying or selling or even deposit and withdrawal from domiciliary accounts.”
Daily Trust checks with a Bureau de Change operator, Yusuf Baba who operates from Gbagada indicated that the US dollar was selling for N520/1$.
Another seller, Mr Shittu who is based in Apapa gave the rate as N522/1$ up from N507 it sold between 8 am and 10 am.
In Dutse, Jigawa State capital, diverse reactions trailed the implementation of the new CBN policy on foreign exchange by commercial banks.
During visits to some banks in the state capital, Daily Trust gathered that, while some banks already have separate forex desks, others were awaiting directives from their head offices.
Officials at Access Bank and UBA branches in Dutse confirmed that their branches already had Forex Desks created and were running smoothly before the new policy was announced on Tuesday.
Mr. Tolu Afolabi, the Dutse Branch Manager of Access Bank told Daily Trust that the bank has an existing Forex Desk.
However, the Branch Manager of Zenith Bank, Hajia Rashida said they were still awaiting further directives from the Head Office before taking the next action on the policy.
In Kaduna, many banks visited had not started complying with the directive given by the CBN to open forex desks for customers.
A staff of one of the commercial banks who pleaded anonymity said, “We are yet to create such a desk, for now, we are only servicing customers with dollar accounts or those that have their travel papers.”
He noted that even though CBN has given the directive, it will take some time before processes are put in place to open the desk for customers to walk in and change their dollars. A BDC operator, Aliyu Sani described the directive as an attempt by the government to create scarcity.
He said, “The government cannot stop us from getting dollars, they can only make it scarce. Many people prefer coming to us because it is easier and faster unlike in the banks.”
He added, “We will continue to access forex because Nigerian’s will always travel, the government just wants to discourage our business and it is not the first time.”
None of the banks visited on Calabar Road in Calabar had a front desk for forex.
An official said they have just heard the information and their management was yet to implement the new policy.
At another bank, no customer came for forex transaction at the time of our reporter’s visit.
Findings at Bogobiri, a Hausa settlement in Calabar where the forex business bubbles, indicate no change. Mallam Haruna Idris, a trader in the area, said the policy change would have little impact on their operations.
“Many customers prefer us to the banks”, he said.
In Plateau State, most of the banks visited were yet to create any forex desk, saying that the policy was just announced and therefore have to wait for directive before any action. Abdullahi Musa, a BDC operator in Jos said they were waiting to see the situation before any engagement as there was no certainty on what will be the implication of the new policy.
In Owerri, the Imo State capital, a bank official who spoke to our correspondent on the condition of anonymity, said that the branch was yet to receive a directive on that. He said, “Though the directive is to take immediate effect, we at the branch office are yet to get a clear directive on the policy”.
One of the BDC operators, who plies his trade along Douglas Road in Owerri, also told our correspondent that the policy will have a negative effect on the foreign exchange market.
He said, “We are waiting to see the way and manner the full implementation of the policy would go, but all I can tell you is that it will have a negative effect on the forex market”.
Commercial banks in Yenagoa, Bayelsa State capital said they were waiting for management directives to set up the forex desks as ordered by the CBN.
Daily Trust gathered that while commercial banks visited had yet to open forex desks, customers were still patronising the parallel market.
A staff at the customer care section in one of the banks told Daily Trust that they could not on their own set up the forex desk except the management directed.
The staff who pleaded not to be named, said: “The issue is even beyond the branch management. I believe the directive must come from the head office in Lagos before they will mandate us to do it here.
“Hopefully, before the end of this week or early next week, the desk could be open.”
At another commercial bank in the Amarata axis of Yenagoa, staff said they had not established the desk yet and customers will be informed when it’s done.
When Daily Trust visited some of the banks within the Ilorin metropolis, it was observed that the directive to open a forex desk was yet to be complied with.
Some bank staff said they were unaware of the directive of the apex bank. They also referred interested customers back to the operators of Bureau De Change.
At the UBA branch at Challenge, Ilorin, a staff said there was no such desk around past 4 pm when our reporter visited adding that for now, “we don’t sell foreign exchange”.
At an FCMB branch the story was similar. Although, there was no designated desk for forex, it was discovered that bank staff still collaborate with BDC operators for forex transactions.
Commercial banks in Benue State with exception of those already operating forex desks are yet to comply with the directive of the CBN a day after cancelling the sales of forex to BDCs.
Our correspondent observed at the Keystone Bank in Makurdi that the policy is yet to be affected because the bank had not yet set up forex desk.
But at the GT Bank where the forex desk already existed, it was gathered that only those buying forex for school and business purposes were being considered.
A BDC operator in Makurdi, Suleiman Yushau, said since the pronouncement of the policy on Tuesday, they have been getting their forex solely from individuals.
“We buy from people. Though we get them in small quantities, however, we can still manage,” he said.
In Katsina, a staff of Sterling Bank, who craved for anonymity told our reporter that there was no formal communication from their head office with regards to the new CBN directives.
He however added that the bank was already having a desk that deals with foreign exchange for Personal Travel Allowance (PTA), Business Travel Allowance (BTA) and payment of school fees for students going abroad.
Similarly, at Ja’iz Bank, an operation staff said they heard about the news but there was no formal communication from their head office on how to go about the transaction.
Ex-CBN chief faults decision
A former deputy governor of the CBN, Obadiah Mailafia said commercial banks cannot be trusted to manage the forex sales.
The PUNCH reported Mailafia saying this when he featured in a live programme on PUNCH Online.
“How can you totally trust these commercial banks because most of them will want to corner the dollar for themselves and whatever is left, then they can now share with the market at a rate they want?” he queried.
The former deputy governor of the apex bank also said, “If we are not careful, that decision will actually worsen the naira value because the BDCs, you could walk into any of them anywhere and within five minutes, they will attend to you but the banks, you have to drive to your nearest bank, you have to queue most of the time.
“The CBN has not told us the rate, the banks will want to make a profit over the official rate. We don’t know whether they will make a decent profit or they will profiteer. Bankers were the biggest experts in round-tripping. Old habits, I don’t think they change. Leopards are very unlikely to change their spots.
“So, we may end up in a scenario where there is scarcity and the simple economics of demand and supply tells you that where there is increase scarcity, price is likely to shoot up.
“If bank bureaucracy makes it difficult for people to access dollar, what it means is that the bureaucracies, obstacles and bottlenecks are likely to put pressure on supply and pressure on supply may mean an increase in demand for the dollar and greater fall of the naira, if we don’t play the cards well.”
Story By: Chris Agabi (Abuja), Ibrahim Musa Giginyu (Kano), Mohammed Abubakar (Dutse), Sunday Michael Ugwu (Lagos), Maryam Ahmadu-Suka (Kaduna), Eyo Charles (Calabar), Ado A. Musa (Jos), Jude Owuamanam (Owerri), Bassey Willie (Yenagoa), Mumini Abdulkareem (Ilorin), Hope Abah (Makurdi) & Tijjani Ibrahim (Katsina)