CBN institutes monopoly in forex trading

• First Bank becomes sole dealer
• 195 BDCs suspended
• ‘Why decision has changed nothing’

The Central Bank of Nigeria (CBN) might have inadvertently instituted a monopolistic system solely enjoyed by First Bank of Nigeria Plc. But some analysts have described the decision to ban all other banks from trading in foreign exchange (forex) with Bureaux de Change (BDCs) as “very strange”.

The apex bank on Wednesday banned all but First Bank for flouting its rules on sale of foreign currency proceed of international money transfers to BDC operators. It also suspended as many as 195 BDCs from forex trading.

The Registrar/Chief Executive Officer, Institute of Credit Administration (ICA), Prof. Chris Onalo, has, however, warned that the action was capable of heating up the economy, noting that government regulators had to be mindful of the country’s international reputation.

Although the CBN is yet to make the sanction public, spokesman for the regulator, Isaac Okoroafor, in response to The Guardian’s enquiry, said the move “is not monopolistic.”

He said: “Since depreciation has stopped, we now have a more reliable way of providing liquidity for the BDCs. The banks flouted our rules, so we have to sanction them and operate what works better.”

Refusing to comment on First Bank’s escape of the sledgehammer, Okoroafor said the BDCs were suspended for various offences.

“I can confirm that the CBN suspended 195 BDCs. Some of them have not renewed their licences and some have not made returns to us.”

Some of the affected banks told The Guardian nothing has “really changed.”

“Yes, we have been banned from selling forex to the BDCs, but it would have been a sanction if CBN had also banned banks from selling to Travelex. We still sell to Travelex, who, in turn, sell to the BDCs. The Travelex operators still come to the banks for forex.”

Meanwhile, First Bank is euphoric over its success, declaring the CBN’s pronouncement as “a testament to the Bank’s strong financial base and its avowed support to the growth and development of a sustainable national economy.”

A statement, yesterday, from the bank’s Group Head, Marketing and Corporate Communications, Folake Ani-Mumuney, said: “The announcement is coming on the heels of the Bank’s strengthened money transfer services, as well as its strict compliance with CBN’s rules and directives on the sale of foreign exchange. The Bank had consistently sold dollars to over 500 BDCs, as directed by the CBN, to improve dollar liquidity and strengthen the naira in line with the new flexible foreign exchange policy.”

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  • Basil Ogbanufe


  • Anne Mumuney

    Cbn sells to travelex who sells to bdcs??? Now First bank has the only licence to sell? All this imaginative manipulation to leave room for round-tripping!! If only we could apply all this ingenuity to constructive thinking. If we were serious we would have gone back to our Exchange Act of I think 1952. What to do Nigeria?