Business - Business & Economy - News - July 27, 2021

CBN indicts foreign embassies, others in massive FOREX racketeering in Nigeria

Bans allocation of FOREX to BDCs; halts issuance of fresh licenses to BDCs

MEDIATRACNET

The Central Bank of Nigeria (CBN) on Tuesday accused foreign embassies, development finance institutions and international development organizations in Nigeria of conniving with illegal foreign exchange dealers to circumvent the country’s foreign exchange laws.
The CBN governor, Godwin Emefiele, made the accusation in the communique he read at the end of the monetary policy committee (MPC) meeting in Abuja.
In the communique, the CBN governor said the committee retained all monetary policy parameters unchanged.
Consequently, he said monetary policy rate (MPR), also called lending rate was left unchanged at 11.5 percent, with the asymmetric corridor of +100/-700 basis points around the MPR, and cash reserve ratio (CRR) at 27.5 percent) and Liquidity Ratio at 30 percent.
The MPR is the controlling rate approved by the CBN for commercial banks’ lending activities for the period, while the CRR is the minimum deposit a commercial bank must hold as reserves in its account with the CBN.
In a special announcement during the briefing, Emefiele said the apex discontinued the weekly sale of foreign exchange to Bureau de Change operators, which he said has become a channel for illegal FOREX transactions and corruption.
Also, he said the CBN would no longer issue fresh licenses to BDCs, while the weekly allocation of FOREX would henceforth be channeled through the Deposit Money Banks.
“We are concerned that BDCs have allowed themselves to be used for massive corruption of the FOREX market,” the CBN governor said.
Lamenting the various illegal deals that have been going on in the parallel market, the CBN governor said international bodies, including some embassies and donor agencies, have been fingered in numerous unauthorized transactions with FX procured from the CBN into the country.
He said the CBN has evidence that these agencies operating in the country patronize BDCs through illegal FOREX dealers to fund their local operations in flagrant contravention of the country’s foreign exchange laws and regulations.
“CBN examiners are currently looking at the books. We have reports indicting DFIs, Embassies, international development organizations who, instead of selling their FX into the recognized import and export FX windows resorted to cooperating with illegal FOREX dealers in flagrant contravention of our foreign exchange laws and regulations in Nigeria.
“We will deal ruthlessly with Nigerian banks found acting as collaborators with these illegal FOREX dealers, because they have allowed their banking and payment system infrastructure to be used to facilitate these illegal dealings in FX.
“For organizations involved, we will report them to their regulators, by writing to those organizations seeking their understanding that if they must continue to operate in Nigeria, they must adhere to our regulation for procuring FX and Naira for their domestic operations,” he said.
The decision to wield the axe against the BDCs may not be unconnected with the huge number of applications the apex bank receives monthly and the reported illegal activities of some of the FOREX dealers.
He said the CBN receives an average of about 574 applications for operational licenses from BDCs every month, apart from about 5,500 licensed BDC operators currently in the country.

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