BDC Operators Still Await Access to CBN's $150,000 Weekly Forex Window
Bureau de Change operators across Nigeria have reported that they have not yet been able to access the official foreign exchange window announced by the Central Bank of Nigeria, despite the policy approval that allows licensed BDCs to purchase up to $150,000 weekly through authorized dealers. This development comes even as the Naira continues to show steady gains in both official and parallel markets, narrowing the exchange rate gap between these segments.
Policy Announcement Meets Implementation Challenges
The Central Bank of Nigeria had previously issued a circular permitting licensed Bureau de Change operators to access foreign exchange through authorized dealers at prevailing market rates. Under this directive, each BDC is allowed to purchase up to $150,000 weekly, subject to Know Your Customer requirements and standard due diligence checks. However, operators now reveal that no transactions have been completed under this new arrangement since its announcement.
An anonymous BDC operator explained that the circular's provision requiring disbursements through settlement accounts has raised significant operational concerns. The operator questioned the feasibility of seamless, real-time transfers between domiciliary accounts across different banking institutions, suggesting that the necessary infrastructure may not yet be fully operational.
Banking Processes and Operational Hurdles
The BDC operator further detailed that while commercial banks appear supportive of the policy in principle, many financial institutions are still developing internal processes to align with the Central Bank's directive. According to the operator, BDCs are required to submit bid orders through their banks, which would then access the market on their behalf.
This arrangement could potentially reduce entry barriers for BDC participation if properly implemented, the operator noted, given the current structure of the bureau de change segment in Nigeria. The operator emphasized that BDCs remain a crucial channel in the Central Bank's foreign exchange transmission mechanism, with exchange rate movements often responding to interventions targeted specifically at this segment.
Potential Impact on Informal Trading
Industry operators believe that improved access to the official foreign exchange window could help moderate the activities of informal and online traders, who currently attract customers with faster transaction processing and fewer documentation requirements. The BDC sector argues that proper implementation of the CBN's policy could reduce reliance on these informal channels and bring more transparency to the foreign exchange market.
Naira Performance and Economic Context
This implementation delay occurs against a backdrop of strengthening Naira performance. Recent market data indicates that the Nigerian currency appreciated by nearly 7% within two weeks across both official and parallel market segments, reaching one of its strongest levels in approximately two years. At the parallel market, the Naira traded at N1,340 to the dollar on Thursday, compared to N1,440 earlier in the week. Meanwhile, at the official window, it closed at N1,338 to the dollar, improving from N1,347 recorded on Monday.
Nigeria's foreign exchange reserves have also shown significant growth, surging to $48.5 billion and marking their highest level in nearly 13 years. This represents a $2.94 billion increase from the $45.56 billion recorded on January 1, reflecting a 6.45% gain so far this year. The Central Bank has projected that reserves might reach $51 billion by 2026, signaling a positive economic outlook for the country.
The Bureau de Change operators' inability to access the official window despite these favorable economic indicators highlights the gap between policy announcements and practical implementation in Nigeria's financial sector. As the Central Bank continues its efforts to regulate the foreign exchange market and stabilize the Naira, the successful execution of this $150,000 weekly window policy remains crucial for achieving broader market objectives.
