Banking

CBN begins sales of Forex to bdcs

The Central Bank of Nigeria (CBN) has announced its decision to sell foreign exchange worth $20,000 to each eligible Bureau De Change (BDC) operator across the country.

This is coming more than two years after the former CBN governor, Mr. Godwin Emefiele stopped the sales of foreign exchange to BDC operators in that segment of the foreign exchange market.

The apex bank disclosed this in a new circular issued and signed by the Director, Trade and Exchange Department, Hassan Mahmud, on Tuesday.

The circular stated that the move is aimed at rectifying the persisting distortions in the retail segment of Nigeria’s foreign exchange market and bridging the widening gap in the exchange rate.

It said the allocation would be sold at a rate of N1,301/$, reflecting the lower band rate of executed spot transactions at the Nigerian Autonomous Foreign Exchange Market, as of the previous trading day, dated 27th February 2024.

The circular read: “Following the ongoing reforms in the foreign exchange market, aimed at achieving an appropriate market-determined exchange rate for the Naira, the Central Bank of Nigeria has observed the continued price distortions at the retail end of the market, which is feeding into the parallel market and further widening the exchange rate premium.

“To this end, the CBN has approved the sale of foreign exchange to eligible Bureau De Change to meet the demand for invisible transactions. The sum of $20,000 is to be sold to each BDC at the rate of N1,301/$- (representing the lower band rate of executed spot transactions at NAFEM for the previous trading day, as of today, 27th February 2024).

“All BDCs are allowed to sell to end-users at a margin NOT MORE THAN one per cent above the purchase rate from CBN”.

It further directed eligible BDCs to make Naira payments to the designated CBN Foreign Currency Deposit Naira Accounts and submit confirmation of payment, with other necessary documentation.

“All eligible BDCs are directed to make the Naira payment to the designated CBN Foreign Currency Deposit Naira Accounts and submit confirmation of payment, with other necessary documentation, for disbursement at the appropriate CBN Branches Abuja, Awka, Lagos and Kano”, it added.

The CBN in frantic efforts to save the free fall of the naira has made a number of significant reforms towards addressing Naira depreciation, such as probing and clearing foreign exchange backlog, limiting forex for foreign education and medical tourism, increasing BDCs’ minimum share capital, and curbing foreign exchange speculators, among others.

Banking

CBN restricts BDCs to one dealer bank per week for $25,000 FX purchase

Foreign education gulped $609.5m in eight months — CBN

The Central Bank of Nigeria (CBN) has introduced new regulations allowing Bureau de Change (BDC) operators to purchase up to $25,000 weekly from a single Authorised Dealer Bank (ADB) to cater to retail forex demand for eligible invisible transactions.

The directive, outlined in a circular from the Trade and Exchange Department and signed by Dr. W. J. Kanya, the Acting Director, is dated February 5, 2025. It sets compliance requirements aimed at promoting transparency and curbing potential forex misuse.

Key Provisions of the New Guidelines include: Single Dealer Bank Rule: Each BDC can only source FX from one authorised dealer bank per week, a measure designed to prevent speculation and enhance regulatory oversight.

It says violators will face sanctions.

According to the bank, authorised dealers must sell FX to BDCs at the prevailing rate in the Nigerian Foreign Exchange Market (NFEM) window, ensuring uniform pricing.

BDCs cannot charge more than Ipercent above their purchase price when selling FX, regardless of its source, to prevent excessive charges and promote fairness.

“Purchased FX can only be used for specific transac-tions, with a cap of $5,000 per transaction per quarter.

Eligible uses include:Busi-ness Travel Allowance (BTA)
/ Personal Travel Allowance (PTA); Overseas school fees ;Overseas medical expenses;
Strengthened Anti-Money Laundering Measures, ” the circular.

To combat financial crimes, the CBN mandates that BDCs to maintain proper records, including the Bank Verification Number (BVN) of end-users.

It also mandates them to endorse disbursed amounts in beneficiaries’ international passports;Strictly comply
with Anti-Money Laundering (AML) laws and Know Your Customer (KYC) requirements.

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To enhance transparency, both ADBs and BDCs must submit reports to the CBN.

They must send weekly reports of FX sales to BDCs in a specified Excel format via teddmo@cbn.gov.ng.

The CBN noted that BDCs must render daily returns on forex purchases and utilisa-tion through the Financial Institutions Forex Reporting System (FIFX).

The CBN warns that any BDC or Authorised Dealer Bank found violating these guidelines-including forex diversion-will face severe sanctions, including the suspension of their dealership license.

In a related development, the CBN has extended the deadline for BDC operators to access the Nigerian Foreign Exchange Market (NFEM) for weekly FX purchases. Initially set for January 31, 2025, the deadline has been pushed to May 30, 2025.

The extension is expected to stabilise the parallel market, improve liquidity, and reinforce the CBN’s commitment to ensuring forex accessibility while maintaining regulatory oversight.

These new measures align with the apex bank’s broader strategy to stabilise the naira, curb speculative activities, and enhance forex market transparency.

Banking

Nigeria’s economy to expand by 4.17%, inflation to ease in 2025 — Cardoso

The Central Bank of Nigeria Governor, Olayemi Cardoso, on Thursday, said the country’s Gross Domestic Product is expected to grow by 4.17 percent and inflation is expected to ease in 2025.

Cardoso disclosed this at a recent conference, according to Reuters.

While Nigeria’s inflation currently stands at 34.80 percent, Cardoso is optimistic that it is expected to decline as President Bola Tinubu’s reforms start to yield results.

He also said foreign exchange reserves rose gradually, driven by increased oil production. Oil output is forecast to reach 2.3 million barrels per day by mid-year, Cardoso said.

Cardoso pledged to take Nigeria’s foreign exchange reserves to more than $40 billion after recording a $6 billion FX inflow in 2024.

According to Cardoso, the central bank’s priority remained to maintain price stability and to bolster market confidence. To this end, the bank aims to enhance transparency and efficiency within the foreign exchange market.

“With limited opportunities for FX arbitrage, we expect that there will be more appetite for real sector development,” he stated.

Banking

CBN fines 9 banks N150m each over scarcity of cash in ATMs

The Central Bank of Nigeria, CBN, has issued fines to at least nine Deposit Money Banks for failing to ensure cash availability via automated teller machines, ATMs, during the festive season.
The fines total N1.35bn, with each of the banks fined N150m.

The banks were found culpable after spot checks revealed non-compliance with the Central Bank’s cash distribution guidelines.

A statement released by CBN acting Director of Corporate Communications, Mrs Hakama Sidi Ali, on Tuesday, read: “In a clear message of zero tolerance for cash flow disruptions, the Central Bank of Nigeria has sanctioned Deposit Money Banks for failing to make naira notes available through automated teller machines during the yuletide season.

“Each bank was fined N150m for non-compliance, in line with the CBN’s cash distribution guidelines, following spot checks on their branches. The enforcement action follows repeated warnings from the CBN to financial institutions to guarantee seamless cash availability, particularly during periods of high demand.

“The affected banks include Fidelity Bank Plc, First Bank Plc, Keystone Bank Plc, Union Bank Plc, Globus Bank Plc, Providus Bank Plc, Zenith Bank Plc, United Bank for Africa Plc, and Sterling Bank Plc.”

The fine will be debited directly from the banks’ accounts with CBN.