CBN, Bureaux de change intensify battle against forex dealers

Following desperate moves by the Central Bank of Nigeria to sanitise the forex market and halt the naira’s free fall, the Association of Bureaux De Change Operators of Nigeria says it has begun sharing suspicious transactions by its members with the apex bank.

This is coming after the CBN’s vow to clamp down on abokiFX website, its owner and patrons.

The CBN Governor, Godwin Emefiele, had in July announced the end of forex sales to BDCs, saying they abused the privilege of forex allocation to them and that the parallel market had become a conduit for illicit forex flows and funding of terrorism.

With the latest move by the ABCON, there are strong indications that more forex operators may be prosecuted as the association has assured the CBN that it will continue to share such suspicious transactions with the apex bank.

Responding to a question from one of our correspondents, the President, ABCON, Aminu Gwadade, said, “We share suspicious transactions among our members with CBN-BDCs.

“I am not in a position to speak on the allegations. I guess the investigating agencies are at best to share insight on the generalisation of the criminalisation. We in ABCON share suspicious transactions activities with the CBN for their necessary action.”

CBN freezes accounts

Earlier, the CBN had published about 200 names of forex defaulters after obtaining orders from the Federal High Court, Abuja division, to freeze the bank accounts belonging to firms and Bureaux de Change to enable it to conduct investigations into suspicious activities.

The motions ex parte signed on different dates sought the orders of the court to direct the banks to freeze all other bank accounts of the defendants for a period of 180 days, pending the outcome of investigation and inquiry being conducted by the CBN.

A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said stopping forex sales to the BDCs was appropriate because the operators had been doing all sorts of illegal operations and making huge fortune from the country’s reserves.

According to him, the decision to clamp down on abokiFX was also appropriate.

He said, “There is CBN outside CBN. People are transferring money every day from this country. They pay naira here and collect dollars and do whatever they want to do and they don’t go through CBN. It means that anything can happen; you can bring whatever equipment you want to bring in.

“When you prosecute somebody, if he has done nothing wrong, you leave him. But if he has done something bad, he pays for it. A lot of irregularities are going on in the forex market.”

Naira slumps further

Eight weeks after the CBN stopped forex supplies to the BDCs, the naira continued to maintain its downward trend as it exchanged to the dollar for N570.

Before the supply cut, the naira had exchanged to the dollar at N490 at the parallel market.

Reacting to the development, the CBN maintained that “the only recognised exchange rate was the I&E forex window, which was the market that it expected Nigerians needing forex to go to.”

A financial analyst and a Senior Economics Lecturer at the Pan-African University, Olalekan Aworinde, said if AbokiFX had done anything against the law, the law could take its full course but that if the site only speculated and had not done anything wrong, it would be a waste of efforts by the CBN because the problem was  not with such websites but with the policies the apex bank had been implementing.

He added, “Looking at it critically, we can see that it is the CBN that takes the major blame for the current state of the forex market. If they have done well to allow the forces of demand and supply to determine the value of the naira, this naira won’t have such a low value.

“You can see the case of the ban of forex sales to BDCs operators, this decision has negatively affected the value of the naira and so has the other policies they have introduced over the years.”

AbokiFX suspends forex publication

Meanwhile, on Friday, abokiFX suspended its publication of exchange rates between the naira and other currencies on its website following the CBN’s threat to clamp down on its operations.

After the Monetary Policy Committee meeting in Abuja on Friday, the CBN Governor, Godwin Emefiele, vowed to shut the website and prosecute its owner and other patrons for operating illegally.

It accused AbokiFX of manipulating the exchange rates to sabotage the economy.

Reacting to the allegation, AbokiFX disclosed in a statement on its website on Friday evening titled ‘Temporary suspension of rate publication – AbokifX’, that it decided on September 17, 2021, to temporarily suspend rate updates on all its platforms, until it gets better clarity of the situation.

“Final rates have been posted this evening but the abokiFX news section and the Crypto rates section will still be active,” it added.

Pursuing Aboki FX, a waste of efforts – Experts

Some financial experts however disagreed with the decision of the CBN to prosecute the owner of AbokiFX, describing it as a waste of efforts and a deviation from the major problems of the foreign exchange market.

According to the financial experts, the devaluation of the naira was not primarily caused by sites like AbokiFX but policies and impulsive decisions of the apex bank, as well as the failure of agencies saddled with the responsibility of the fiscal aspect of the economy to function effectively and stimulate economic growth.

A former presidential candidate and political economist, Prof Pat Utomi, said he disagreed with the decision.

He said, “As a general principle, I disagree with that approach. Of course, markets need to be regulated and have boundaries, but I think that it is too easy to blame markets when sometimes the problem might be from within.

“I think there is nobody who is knowledgeable that does not know that for a number of years, policymakers were the biggest problem with the forex market.

“Let us not deceive ourselves, the current order has ruined the forex market, so for those who made such decisions to now complain, I think it is uncharitable. If they continue to clamp down on this and that, then the market would collapse and we will return to where we were in the 1980s.”

Also, a professor of Economics at the Olabisi Onabanjo University, Ogun State, Sheriffdeen Tella, said while AbokiFX might be influencing the forex market, depending on the size of the forex transactions it conducts, the operations of the  platform was not the major driver of forex scarcity and naira devaluation.

He said these were driven by the failure of the fiscal segment of the economy to complement the efforts of the monetary aspect in the country.

Tella stated, “It depends on the volume of transactions that abokiFX is conducting. If it carries out large transactions, it can influence the foreign exchange market. If it is true that he has numerous accounts where he is speculating dollar, then he might be influencing the forex market.

“I know that speculation is one of the factors that is causing a devaluation of the naira against foreign currencies. BDCs speculate to pressurise the CBN to start giving them dollar.

“However, I think the problem of forex in Nigeria is not restricted to BDCs or sites like abokiFX, the major problem is that the fiscal part of the economy, the Ministry of Finance and related agencies are not doing what they have to do to support the economy or complement the efforts of the agencies in charge of the monetary aspect of the economy, like the CBN.”

During the briefing after the MPC meeting, the CBN governor, Emefiele, said the apex bank would track and prosecute anyone trying to sabotage the country’s foreign exchange market.