ABCON Raises Alarm Over Forex Supply Shortage from CBN
By Adedapo Adesanya
The Association of Bureau De Change Operators of Nigeria (ABCON) has lamented over the foreign exchange (forex) crisis facing the country, saying that supply from the Central Bank of Nigeria (CBN) has reduced drastically.
The association’s president, Mr Aminu Gwadabe, made this disclosure during a recent interview on Channels Television.
He noted that the forex crisis was as a result of massive speculation, hoarding and panic buying, which have put the local currency under serious pressure.
He complained that about $3 billion was waiting to be wired offshore by investors should the pandemic disappear and economic activities resume fully.
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 alerted.
He warned that this remained an unhealthy development for the economy because such actions were putting undue pressure on the Naira.
He explained that various financial forecast of the economy predicted that diaspora remittances would be down by 20 percent, 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 the 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.
Mr Gwadabe also kicked against the activities of rent-seekers in the forex market, saying their continued presence willing bring about serious danger because they are not adding value to the economy.
The ABCON boss charged the government and its regulatory agencies to look at a change in methods, saying forex inflow may not happen anytime soon because every country and investors are hoarding same due to the coronavirus pandemic.
He challenged the 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.”