ABCON to CBN: Allow non-oil exporters to hold FX for 48 hours

By Abubakar Yunusa

The Association of Bureaux de Change Operators of Nigeria (ABCON) has asked the Central Bank of Nigeria (CBN) to direct non-oil exporters to hold foreign currencies in their domiciliary accounts for 48 hours.
Aminu Gwadabe, president of ABCON, spoke in a statement on Thursday, while lending the association’s support to the recent directive to stop the use of the non-oil export domiciliary accounts deposits for naira loans.
On April 8, CBN directed all banks to stop the use of foreign currency-denominated collaterals for naira loans.
According to the financial regulator, all existing loans with foreign currency collaterals would be trimmed to 90 days or attract a 150 percent capital adequacy ratio computation as part of the bank’s risk.
Commenting on the efforts of the CBN, Gwadabe said the directive would add to dollar liquidity in the market.
“We are bewildered that some companies and manufacturers with huge billions of dollars balances in their non-oil export Dom account source their FX needs in the official window and use the same for naira loans,” Gwadabe said.
“We therefore advise for the review of the guidelines on holding currencies on non-oil export accounts to a maximum of 48 hours, to borrow from the South African policy on the operations of non-oil exports Dom account proceeds.
“The CBN should also not make applicants of huge billions of dollars holding on their non-export oil proceeds Dom accounts eligible for FX request at both the Nigerian Autonomous Foreign Exchange Market (NAFEM) and Nafex window.”
Gwadabe also called on the CBN to seek legislative backing for its policies and circulars on BDC reforms in order to improve investors’ confidence.
“In the same vein we urge the CBN to upgrade its policies and circulars to legislation regarding the impending BDCS new reforms to give comfort and guarantees to would be investors in the transformation of the BDC industry’s sub sector and allowing only the existing stakeholders the grants father’s right for merger and acquisition to meet the expected reviewed financial requirements as suggested by ABCON,” he said.

“We also want to pledge our continuing support to the CBN’s proactive and effective policies to address our volatility headwinds.”

Gwadabe further said as a self-regulatory body, its members have resolved to continue engaging all stakeholders and players in the retail end market to deepen, liberalise, democratised and centralise the retail end segments of the market for price discovery, market efficiency, transparency, accretion of buffers and healthy balance of payments.

“We therefore urge the CBN to continue to drive and expand its thought mechanism to maintain the feat so far achieved in more than 15 years; as we have not only achieved the convergence of both rates, but market calmness and confidence of the public and foreign investors,” he said.

“We also call for the separation of the ownership and operational structure of FMDQ.”

Meanwhile, on February 28, the CBN released operational guidelines for BDC activities in Nigeria in a bid to reform their market.

CBN directed tier-1 BDCs to raise their capital base to N2 billion, while those in the tier-2 category are required to have a minimum of N500 million.

The financial regulator raised the minimum capital requirement from N35 million previously set for all BDCs.