N305/$ Exchange Rate, Not Transactional as Naira Stabilizes

Aminu Gwadabe, the President of Association of Bureaux De Change Operators of Nigeria (ABCON) in defending the Central Bank of Nigeria’s (CBN) N305 to dollar exchange rate policy on Sunday, explained that the rate is for settling government obligations and not a transactional rate as being speculated.

He faulted the petition against the CBN Governor Godwin Emefiele and the bank’s management team on the deployment of dual exchange rate regime in foreign exchange allocation.

Gwadabe said: “There is a case against the CBN governor and his management team written by J.U Ayogu. The petition which is before the Senate was laid on December 12, 2019, where J. U Ayogu, Esq, on behalf of the Bureaux De Change Operators of Nigeria wrote against the CBN over its dual exchange rate forex policy that enriches few Nigerians and its top management staff to the detriment of many lawful Nigerians.

SEE ALSO: Stop N305/dollar official exchange rate, LCCI tells CBN

Human Rights Lawyer, J.U Ayogu, had petitioned accusing the apex bank of compromise in the allocation of foreign exchange, prompting an invitation of Emefiele by the Senate Committee on Finance to appear before it on February 7, 2020,

Ayogu pleaded with the Senate to compel Emefiele to review the dual exchange rate policy without delay to keep Bureaux De Change (BDC) operators in business.

The ABCON President said the CBN forex policy has brought stability to the BDC industry and helped operators to embrace automation which is the standard best practice globally.

Speaking further, he said no BDC, or service provider, gets forex at N305 to dollar and that the petitioner’s claim is completely false.

Gwadabe said: “This is hand work of unknown faces not ABCON. It is confrontational and lack credible evidence. The N305/$ is not a transactional rate but for settling government obligations.

He said that ABCON has appointed Mike Akinfolarin & Associates as ABCON Consultant/ Tax Attorneys on VAT, which is a bigger problem confronting operators as a large part of their income go into paying taxes adding that in other economies, foreign exchange rate control by government is VAT exempt.

“ABCON submission to the National Assembly is on Value Added Tax (VAT) exemption and review of licence fee renewal downward submitted to the CBN. The petitioner was never at any time appointed to speak on behalf of BDCs.”

“That the law firm of Mike Akinfolarin &Associates (Tax Attorneys) made a representation on behalf of ABCON before the  National Assembly public hearing,  House Committee on Finance Bill  on November 25, 2019 in Abuja. And that remains the position of ABCON.”

Beside the rates differentials, Nigeria needs multiple streams of forex earnings and the enlisting of more channels to attract Diaspora remittances and other foreign capital that will not only deepen the market, keep the naira stable and boost operations of BDCs, the President said.

For instance, Diaspora remittances to Nigeria, which stood at $25 billion annually in 2018, remain a reliable source of forex to the domestic economy and should form part of the revenue stream for over 4,500 CBN -Licenced BDCs.

Gwadabe also made a case for the need to make BDCs one of the channels for receiving Diaspora remittances into the economy to create more income for operators adding that BDCs remain at the centre of economic development and have the capacity to attract needed capital for the development of the Nigerian economy.

He said: “Other great areas to focus for diversifying our foreign exchange earnings include promoting Diaspora remittances for economic buffer and foreign reserves accretion as seen in India and United Arab Emirates where migration remittances have lifted their economies.

Gwadabe while commending the CBN management for its progressive policies, said the CBN has been able to create a people-focused central bank promoting macro-economic objectives such as low inflation and a stable dollar exchange rate, along with a focus on promoting inclusive growth and reducing unemployment in the country.