ABCON President Gwadabe Calls for Review of BDC Ownership Structure

President of the Association of Bureau De Change of Nigeria, Aminu Gwadabe, discusses the recent foreign exchange reforms by the Central Bank of Nigeria and various related issues in an interview with InfoStride News.

Gwadabe begins by addressing the volatility of the naira, emphasizing its negative impact on economic growth. He stresses the importance of currency stability for effective planning and highlights the challenges caused by illegal behaviors, speculation, hoarding, and currency substitution.

The interview delves into the government’s measures to address these issues, including efforts to improve the global perception of the economy and attract foreign investment. Gwadabe explains the significance of complying with Article 8 of the IMF, leading to the unbanning of certain items and subsequent support from multilateral institutions.

The discussion then shifts to executive orders aimed at repatriating funds kept outside the formal economy, estimated to be over $50 billion. Gwadabe also elaborates on the issuance of local foreign currency instruments to encourage investment and reduce currency hoarding.

The interview touches upon the role of the Fiscal Policy and Tax Reform Committee, providing clarifications on expanding the foreign exchange market to include bureau de change and fintech. Gwadabe emphasizes the importance of bureau de change in ensuring liquidity in the retail market and addressing disparities between official and parallel markets.

Concerns about the suspension of bureau de change from the official market in July 2021 are raised, with Gwadabe explaining the impact on market disparities. He acknowledges structural problems but cites examples from 2006 and 2015/2016 where bureau de change inclusion helped close market gaps.

Addressing the issue of currency speculators, Gwadabe discusses the need for stronger penalties for non-compliance and emphasizes the importance of reviewing bureau de change ownership structures to ensure compliance.

The interview concludes with Gwadabe’s perspective on sustainability in the foreign exchange market, highlighting the four elements influencing exchange rates: supply and demand for both dollars and naira. He stresses the importance of the Central Bank’s proactive engagement with stakeholders and suggests domesticating platforms like Binance to tap into opportunities.

Responding to reports of BDCs snubbing the CBN’s directive to trade within +-2.5%, Gwadabe calls for distinctions and clarifications, noting that many licensed BDCs are not operational due to their dependence on the CBN window. He highlights the challenges of complying with rules when the CBN window is unavailable and emphasizes the need for patriotism in capitalism.