The Central Bank of Nigeria (CBN) has approved Bureau de Change (BDC) operators to temporarily buy up to $25,000 weekly in foreign exchange (FX) from the Nigerian Foreign Exchange Market (NFEM).

According to the apex bank, BDC will only be allowed to buy dollars from NAFEM from December 19, 2024, through January 30, 2025.

The move, the apex bank said, is designed to meet seasonal retail demand for FX during the holiday period.

How the BDCs arrangement will work?

According to CBN, Under the directive, BDCs may acquire FX from a single authorized dealer of their choice, provided they fully fund their accounts before accessing the market.

The CBN specified that all transactions under this initiative must occur at the prevailing NFEM rate, with BDC operators adhering to a maximum pricing spread of 1% when offering FX to retail end-users.

Additionally, all transactions conducted under the scheme must be reported to the CBN’s Trade and Exchange Department, Punch reports.

The circular reads:

“In order to meet the expected seasonal demand for foreign exchange, the Central Bank of Nigeria (CBN) is allowing temporary access for all existing Bureau de Change (BDC) operators to the Nigeria Foreign Exchange Market (NFEM) for the purchase of foreign exchange from Authorized Dealers.

"This will be subject to a weekly cap of USD 25,000 (Twenty-five thousand dollars only). The window will be open from December 19, 2024, to January 30, 2025.

BDC operators can purchase foreign exchange under this arrangement from only one authorized dealer of their choice and will be required to fund their accounts fully before accessing the market at the prevailing NFEM rate.

"All transactions with BDCs must be reported to the Trade and Exchange department, and a maximum spread of 1% is allowed on the pricing offered by BDCs to retail end-users."

Instructions to Nigerians

The CBN asked Nigerians in need of foreign currencies for PTA (Personal Travel Allowance) and BTA (Business Travel Allowance) will continue to be available through banks for legitimate travel and business purposes.

The circular added:

"The general public is also reminded of the continued availability of Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) from their banks to meet personal and business travel requirements. All legitimate and eligible foreign exchange transactions are expected to be completed in the NFEM, at the market-determined exchange rate.

"The CBN remains committed to maintaining a fully functional foreign exchange market and will continue to provide liquidity when necessary to manage price volatility. Please be guided accordingly."

ABCON speaks on the importance of BDCs

Aminu Gwadabe, the president of the Association of Bureau de Change Operators of Nigeria, in a chat with Legit.ng express optimism.

He said:

"So far, the CBN intervention in the BDC sub-sector has proven to be the most effective and potent policy tool to achieve its mandate of price stability.

"The challenge is volume and frequency of intervention of the CBN to the BDCs.

"I, therefore, want to advise to maintain the success achieve and enhance policy effectiveness the cbn should continue to leverage on the BDCs to achieve their core mandate."