Naira vs. USD: CBN will outlaw street trading and consider new BDC regulations

by Amos Kalu

The Central Bank of Nigeria has announced new rules to Bureau De Change Operators in Nigeria, including the possibility of ending street trading, in response to the ongoing volatility of the Naira against the US dollar in the foreign exchange market.

This was revealed on Friday by the top bank in its proposed Revised Regulatory and Supervisory Guidelines for Nigeria’s Bureau De Change Operations.

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For Tier 1 and Tier 2 BDC licences, CBN intends to set the minimum capital share amounts at N2 billion and N500,000 million, respectively. This is a departure from the general license’s former capital share of N35 million.

Subject to the CBN’s clearance, a Tier 1 BDC is permitted to operate nationally, open branches, and select franchisees.

The franchisor, a Tier 1 BDC, is responsible for maintaining supervisory control over its franchisees. Every franchisee must use the name, logo, technological platform, and rendition specifications of their franchisor.

A Tier 2 BDC can only conduct business in one state or the Federal Territory. Subject to the CBN’s approval, it may operate out of up to three locations: a main office and two branches. The appointment of franchisees is prohibited.

The development coincides with the Economic and Financial Crimes Commission agents cracking down on illicit BDCs in Abuja, Lagos, Kano, and Ibadan, Oyo State, in an effort to keep the Naira stable versus the US dollar.

The Naira lost value against the US dollar in the FMDQ market on Friday at the end of business, having dropped from N1571.31 on Thursday. In the meanwhile, on the black market.

On Friday, the value of the Naira was N1,750–N1,800 per USD, up from N1,680.00 on Thursday.

Although the CBN has announced a number of FX interventions in recent months, the nation’s foreign exchange problem has continued.

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