News Column

Reps Affirm CBN's Authority On Forex Management

July 17, 2014

Chijioke Nelson

THE House of Representatives Committee on Banking and Currency has explained that its inquest into the new directive of the Central Bank of Nigeria (CBN) for the Bureau De Changes (BDCs) operations was not intended to question the bank's authority to regulate the management of foreign exchange in the economy.

The committee made the clarification during an interactive session with the bank's top management on Wednesday, in respect of the CBN new guidelines and requirements for BDC registration and operations.

The Chairman of the committee, Jones Onyereri, however, reiterated the determination of the body to give CBN all the support to effectively discharge its mandates.

Onyereri, noted that the committee respected the autonomy of the CBN and will work with the bank to ensure that it delivers on its mandate in the overall interest of Nigerians.

But the CBN Governor, Godwin Emefiele, disclosed that a recent cross-country survey of BDCs carried out by the bank revealed that 93 per cent of them were in breach of the objectives and provisions of the guidelines.

Emefiele, who appeared before the committee in response to their summon, said many of the BDCs were either not located or relocated without prior approval, adding that majority of them had no good accounting records and many had no adequate sales document and lacked audit trail.

In his submission, Emefiele stated that the new policy, which entails a minimum capital requirement of N35 million and a mandatory cautionary deposit of N35 million, was intended to ensure the emergence of well capitalised and structured entities.

He reiterated that the new regulatory requirement was not in any way targeted at operators from a certain section of the country, noting that there are operators in all parts of the country.

The Governor warned that there are serious leakages on our foreign exchange reserves necessitating the urgent need to plug such, assuring that the policy is a holistic effort to conserve foreign exchange owing to the massive drain on the country's reserves and to achieve exchange rate stability.

He said the apex bank is now unwavering in its determination to stem the depletion of the country's foreign reserves with flimsy and unproductive transactions.

The CBN chief lamented that far from achieving the laudable objectives for which they were set up and complement financial system, over time the operations of the BDC have been bedeviled by rent-seeking, weak operational structure, financing of illicit transactions, gradual dollarisation of the Nigerian economy and multiple ownership of BDC licences.

On the complaint of short duration given to the operators to recapitalize, the apex bank helmsman said that the time frame was not only adequate, but that over 200 operators have already complied with the new requirements.

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Source: AllAfrica

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