CBN and BDC’s licence revocation

The CBN had earlier published on their website a circular with reference number: FPR/DIR/CIR/FXM/01/004, informing the public of the revocation of class ‘A’ BDC operators’ licences after allegedly circulating text messages to the operators to that effect a day before. The affected operators, who are kicking against the measure are alleging that prior to the […]

The CBN had earlier published on their website a circular with reference number: FPR/DIR/CIR/FXM/01/004, informing the public of the revocation of class ‘A’ BDC operators’ licences after allegedly circulating text messages to the operators to that effect a day before.
The affected operators, who are kicking against the measure are alleging that prior to the licence revocation there was no proper communication, periodic inspection or supervisory exercises by CBN as required in making clear the regulator’s expectations. In fact it was claimed that since the categorization of the BDC operators into class A and B, during the Prof. Chukwuma Soludo administration of the CBN, and issuance of licences in this regard, CBN has only carried out an inspection which was between November and December 2009. Even at that, the said inspection was carried out in a manner that depicts a preset objective as operators alleged that issues were raised on certain operations procedures that were never communicated to the operators as expected of a regulatory authority that is out to build an economy and not into cat-and-mouse games.
It would be recalled that the categorization of the licensed foreign exchange operator’s market which gave birth to class ‘A’ and ‘B’ Bureau De Change operators was a policy instituted by the Soludo-led CBN. The measure was aimed principally at bridging the widening gap between the official and black market price of the dollar; and also to put an end to the uncontrollable changing prices of the dollar. Before the advent of this policy, there have been numerous operators in the class ‘B’ category and the expectation that banks would help in closing the gap was not met as money deposit banks could not do much in helping to pin down the exchange rate to a stable price so as to eliminate the wide gap. It was therefore in an effort to find a lasting solution to the problem of broadening gap that the then CBN authorities decided to categorize the operators.
CBN has effectively handled this situation through the provision of a controlled access to limited number of the class ‘A’ and ‘B’ BDC operators. The number and the FOREX window they access have been structured to impact less on the nation’s foreign reserve or their winning sources. Truly, the objectives were achieved within three weeks, with the common man being happy for it as seen in the stable prices of goods and commodities.
However, the current Sanusi Lamido administration of CBN threw the arrangement overboard and embarked on contradictory and indiscriminate licensing of operators that have since doubled the number without taking cognisance of the burden on the source. The CBN, the operators believed did not pay attention to the fact that the control of the number of operators and the amount accessed periodically was meant to achieve the preset objects without depleting our foreign reserve or exerting undue pressure on the economy. However, when these mechanisms were jettisoned and the pressure begins to mount, CBN management quickly resorted to unilateral withdrawal of licences.
Operators lament that though the general public may not readily see the dynamisms in this and the underlying implication in the current CBN drastic action, the impact will soon be felt by all as it begins to trickle down. This will be seen in the steadily increasing and fluctuating rate of the dollar; a wider gap between the official and black-market price; an untamed inflations rate, business failures and unmitigated hardship to families whose investments have been eroded, increased pressure on the employment market as a large army of people will be relieved of their jobs, scepticism and a cold feet towards Nigeria by investors who can readily see the unreliability of our systems, policy somersault and poor approach to our public policy administration.
Fransis Owowole-Browne wrote from Abuja