Capital Market Expert, Professor Uche Uwaleke has commended the decision of the Central Bank of Nigeria (CBN) to stop the direct sales of Foreign Exchange (Forex) to Bureau de Change (BDC) operators.
In a statement he made available on Tuesday night, the erudite professor said the decision was in the overall interest of the country.
His words: “The hold decision was expected and I had stated the justification earlier. The decision by the CBN to stop forex sales to BDCs has merits and demerits.
“Having said that, I think it is in the best interest of the Nigerian economy.
“On the positive side, it is consistent with the move by the CBN to unify Exchange rates and bring more transparency to the forex market.
“Exchange rate unification is in line with the IMF and World Bank’s recommendations and so improves the country’s profile and credit standing before International financial institutions. It signifies that the country is serious in her reform efforts.
“It will slow down the rate of depletion in external reserves. The move is likely to check round tripping of forex and reduce supply of forex in the parallel market.
“Further, speculative demand for forex is also likely to reduce. I am aware that BDCs have been accused of being vehicles for bribery and corruption. This will likely reduce.
“It goes without saying that a more transparent forex market will improve confidence in the economy and could lead to increased foreign investments.
“On the flip side, this measure will wipe out the employment opportunities created in the sector with over 5000 BDCs and several others waiting to be licensed. There is no doubt that many of them will fold up.
“Also, the gap between the AFEX rates and parallel market rates is likely to widen further with dollar shortages in BDC and parallel market segments.
“Going forward, the CBN should ensure that purchase of forex via the banks which will now increase is made stress free with minimal documentation. This is what pushes people to the parallel market.
Overall, it is a bold and salutary decision that deserves commendation”