BDCs plan emergency meeting over rate convergence, tax
A trader changes dollars with naira at a currency exchange store in Lagos February 12, 2015. REUTERS/Joe Penney
The Association of Bureaux De Change Operators of Nigeria (ABCON) has called for an emergency meeting of its members to discuss critical issues in the foreign exchange market.
Top on the agenda are the convergence of Bureau De Change (BDC) rate with the banks’ rate as well as the need to discourage a prevalence of unregistered forex operators from trading in the market. Also to be discussed are the rising bank charges associated with BDCs’ transactions.
The meeting, which holds on Wednesday, January 10 in Lagos, is expected to be attended by over 3,500 Central Bank of Nigeria (CBN)-licenced BDCs and members of ABCON.
ABCON President, Aminu Gwadabe, who disclosed this on Monday, said negative margins being experienced by BDCs, a review of annual license renewal in view of the number of BDCs, and approval of additional forex disbursement centers in Port Harcourt, Maduguri, Benin, Ibadan, among others, will be discussed at the meeting.
According to Gwadabe said other matters to be discussed are Company Income Tax (CIT) and Value Added Tax (VAT) payment by BDCs, ABCON members’ statutory payments which include CBN Licence Renewal Fees and annual Subscription Fees, as well as late disbursements of forex at various centres.
He added that the meeting would enable members review and acquaint themselves with all the level automations of BDC operations, ABCON, presentation of ABCON Logo for Members’ Corporate Identity and the ABCON Estate among other burning issues within the industry.
He said the challenges faced by BDCs are enormous, as many forex users now prefer to buy their Business Travel Allowances (BTA), Personal Travel Allowances (PTAs), medical bills and school fees payment abroad, through the banks, instead of BDCs, following the convergence of naira/dollar rates at parallel market and BDCs.
The exchange rate at both parallel market and BDCs closed at the weekend at N361/$1. He said the attractive rate at the parallel market has triggered a massive influx of demand from forex users running away from the mandatory regulatory documentations sought by BDCs.
He said the BDCs were at a disadvantage, as forex users shunned them for the parallel market where they could buy without documentation. “Many forex users prefer to buy at the parallel market instead of BDCs because there are no longer rate gaps. They prefer the parallel market where there is no documentation required. That is why we are calling on the CBN to review the rate band for BDCs,” he said.
Gwadabe said the challenges faced by BDCs, if not checked, would trigger a liquidity crisis that may derail the ongoing recovery of the naira against the dollar. “We want the CBN to review the BDC rate to ensure that currency speculators do not return to the market. Remember the BDCs buy dollar at N360/$1 from the International Money Transfer Operators (IMTOs),” he said.
He said ABCON members will also find ways to get the CBN to reduce rising bank charges associated with their transactions. “BDCs are charged N1,000 per N1 million transaction and with each operator paying as much as N67,000 for the N67 million monthly transactions. These charges are too high and our members will be discussing how to get the CBN reduce that burden,” he said.
He further said the group would continue to align with the CBN’s vision of providing a stable framework for the economic development of Nigeria through effective, efficient, and transparent implementation of monetary and exchange rate policy, and management of the financial sector.
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