Stoppage of BDCs FX Funding by CBN Affecting MSMEs—ABCON
By Aduragbemi Omiyale
The Association of Bureaux De Change Operators of Nigeria (ABCON) has said foreign exchange (FX) users, especially in the Micro, Small and Medium Enterprises (MSMEs) sector of the economy, are undergoing untold hardship because of the decision of the Central Bank of Nigeria (CBN) not to sell forex to Bureaux de Change (BDCs).
The group said the FX funding stoppage was hurting the nation’s economy as many medium and small scale users of foreign currencies were having it tough to process Form M in commercial banks for the importation of items needed to complete their productions.
Speaking at its Quarterly Economic Review Report for the fourth quarter of 2021, the organisation advised the bank to consider removing restrictive controls that make it difficult for its members to compete for the $20 billion inflow in the unofficial forex market.
“These and more opportunities are open to the BDC sub-sector to research and evolve operational strategies and techniques without recourse to funding from CBN,” ABCON stated.
As regards the high import bill of the nation, the association said efforts must be made to tackle the issue so as to strengthen the Naira against the major foreign currencies.
“Data from Nigeria Bureau of Statistics (NBS) shows that Nigeria’s import bill rose by 51.1 per cent year-on-year to N8.15 trillion in Q3 2021.
“For as long as imports are increasing without matching equivalents in exports or foreign exchange inflows, the currency must depreciate,” it said.
“By principle, a depreciated currency makes exports of a country cheaper in the international market thereby increasing inflow of foreign exchange but unfortunately for Nigeria, the sectors where it has comparative advantage to excel is grossly traumatised by terrorism and insurgency due to lack of will power of government to control the situation,” it added.
“The serious consequences of the continuous trade deficit are that it also affected the country’s balance of payment account, thereby causing more pressure on the exchange rate.
“Inflation-linked devaluations, which often seemingly lead to higher rates of inflation in the absence of sound domestic policies, are damaging. Government should allow economic reasoning to outplay political tendencies which in the long run may lead the economy into catastrophic consequences,” ABCON stated.