Originally written by Itsibor Mark
Unrest is brewing in Nigeria’s foreign exchange market. Once-dominant firms in the foreign exchange industry have lost their authority and are now avoiding the law.
The decision by the Central Bank of Nigeria to resume selling foreign exchange to Bureau De Change (BDC) vendors following a three-year hiatus, along with the enforcement of the Economic and Financial Crimes Commission (EFCC) agents against illicit traders in the foreign exchange market, have created the conditions for rates to converge as the value of the Naira continues to rise against the US dollar.
Once commonplace in the bustling center of Wuse Zone 4, the illicit Bureau De Change sellers are now on the run. Their once-bustling enclave, which was known for its frantic commerce, is now abandoned. With the help of the CBN and the government, the region has been cleared of all buildings that devalued the naira and turned into a barren wasteland.
The government has won handily when Zone 4 transforms from a bustling center to a barren wasteland. A turning point in the fight against financial malpractice is marked by the destruction of buildings and the expulsion of those involved in illegal cash transactions.
For those who earlier sold speculative goods on the streets, the crackdown portends doom. Vendor Abubakar Bello worries, “It’s a perilous time,” pointing to the constant fear of being arrested. Because of the looming threat of police enforcement, traders are forced to operate covertly, away from the deserted streets of Zone 4.
“Oga, we’re having trouble again. Every time the EFCC and police parade through Zone 4, they would simply run down this street and arrest you and me. Having even a single dollar is strong proof against us. In an interview with this reporter in Abuja, one of the street vendors of hard currencies stated, “They will just handcuff both of us and take us to their office.” “Send me your address and I will come meet you wherever you are if you have a dollar to sell,” he said.
Similar to Bello, the majority of street vendors now transact money outside of Zone 4 out of concern for being harassed or detained by police and EFCC agents.
During EFCC raids on Bureau De Change locations in Abuja in February 2024, more than fifty people were detained on suspicion of being currency speculators. Since then, the regions have been regularly policed. Additionally, the authorities have destroyed buildings in the neighborhood that were utilized for currency racketeering. The BDCs’ unlawful shanties and buildings were destroyed by the Federal Capital Territory Administration’s (FCTA) City Management Team. The intention was to compel the BDC operators to conduct business in authorized and licensed zones.
According to Mukhtar Galadima, Director of the FCTA Department of Development Control, the neighborhood is known for a variety of illicit activities that pose a security risk to locals. “We have nothing to do with the purported crackdown on BDC operators; our concern is to protect the safety and security of the local residents,” he said.
Decency has returned to the area as a result of the clearing and ongoing enforcement of the area against the money racketeers. Now, it is simple for drivers to pass through the typically busy and unclean region. The formerly impoverished Wuse Zone 4 now resembles a metropolitan center, which has helped the naira appreciate slightly vs the dollar and other foreign currencies.
4,173 Bureaux de Change operators had their licenses revoked by the central bank on March 1st due to their noncompliance with at least one of the regulations pertaining to regulated BDCs. To be more precise, the impacted businesses did not submit their returns in accordance with guidelines, pay all required fees—including license renewal—within the allotted time frame as per the guidelines, or follow the CBN’s guidelines, directives, and circulars, especially those pertaining to anti-money laundering (AML), countering the financing of terrorism (CFT), and counter-proliferation financing (CPF).
This sanitization produced odd names that not even many individuals, including the forex traders’ executives, knew. Ten-20 Times BDC LTD, 1717 BDC LTD, 19TH BDFC LTD, 1HR BDC LTD, 1ST Money Exchange BDC LTD, 2017 BDC LTD, 2019 BDC LTD, 2022 BDC LTD, 205 Innovative BDC LTD (formerly Tuge BDC LTD), and 360 Exchange BDC LTD are among the several BDCs that are impacted. A.A. Funtua BDC LTD, A. Maikore BDC LTD, A.A Currency BDC LTD, A.A SILLA BDC, A.A. Dangongola BDC LTD, A.A. Funtua BDC LTD, A.A. Lukoro BDC LTD, A.A. Silla BDC LTD, A.B.S BDC LTD, A.B.Y BDC LTD, and A.G. Tsoho DOGO BDC LTD are also included in the list.
The others are: Zobic BDC LTD, Zoeelux BDC LTD, Zolo BDC LTD, Zomante BDC LTD, ZITTS & Lords BDC LTD, Z-Leo LinK Global BDC LTD, ZLF BDC LTD, ZOBA BDC LTD,
Zuma Rock Global BDC LTD, Zumunci BDC LTD, Zungerru BDC LTD, Zupen Forex BDC LTD, Zonal Global BDC LTD, Zuli-Macaulay BDC LTD, Zulli BDC LTD, and Zulu BDC LTD.
The president of the Association of Bureau De Change Operators of Nigeria (ABCON), Mr. Aminu Gwadabe, stated that it was regrettable that the forex market in Nigeria could not be completely sanitized because it was hard to distinguish between licenced and unlicensed traders. This, he said, has resulted in the industry being stigmatized and criminalized because security agencies do not fully comprehend the situation.
“The operator of FX street trading is the target of this, not the licensed Bureau De Change.” We oppose street trading and back any initiatives aimed at doing away with it. It has an impact on me as well. In a phone discussion, Gwadabe informed reporters, “I have an office, but my clients cannot come to my office because of the menace of street traders.”
Gwadabe, on the other hand, bemoans the collateral harm done to licensed BDCs and promotes a more nuanced strategy to combat illicit trading.
The CBN started forex allocation to the licenced BDCs earlier this month with $10,000 allocation at a rate of N1,251/$1, in an effort to strengthen the market’s supply side and provide buffers to the Naira.
The circular states that BDCs must sell the allotted funds to qualified clients at a rate no more than 1.5% above the acquisition price; this means that BDCs can only sell for a maximum of N1,269/$1. “We are writing to let you know that $10,000 has been sold to each BDC at a rate of N1,251/$1. In a circular to the BDCs, the apex bank stated that the BDCs must sell to qualified end users at a spread of NO MORE THAN 1.5% above the purchase price.
Following a protracted prohibition enforced by the central bank in 2021, dollar sales to BDC operators have resumed as of this notification. Following the cancellation of the licenses of more than 4,173 BDC operators in February, the restriction was removed early this year.
The story of Zone 4’s collapse and eventual rebirth parallels the larger fight for control over Nigeria’s foreign exchange market. Gwadabe’s need for cooperation and clarity emphasizes the necessity of an all-encompassing plan to counteract economic wrongdoing.
The city’s pulse quickens as the dust settles in Zone 4, ushering in a new phase in the continuing fight for financial honesty.
Mr. Joseph Aadebayo, a currency dealer, praised the federal government’s determination to ride the wave of currency speculators in an effort to rebuild market trust, describing the Zone 4 market as formerly an all-comers affair. “I agree with the government’s efforts to clean the area,” he remarked in a conversation with this reporter.
With the antagonism of the security agents toward unlicensed traders, the majority of the Mallams, or agent hawkers of the various currencies, are rumored to have started returning to farms where they feel they would be more productive. “Some of them had large families to feed and were trading with as little as $200.” He lamented the mayhem that had previously reigned in the area, saying, “I think it will make them more productive.”
He does, however, think that Nigeria’s lack of profitable industries to generate dollars or other foreign currencies is a bigger contributing factor to the country’s foreign exchange problems, suggesting that the “government should look into that and reduce corruption.”
According to economists, authorities need to give continued vigilance and enforcement top priority if they hope to maintain the gains made in the foreign exchange market. It is said that in order to stop illegal activity from resuming, it is imperative to keep an eye on licensed Bureaux De Change operators. Hassan Oaikhenan, an economics professor, stated that “regular audits and inspections should ensure compliance with anti-money laundering and counter-terrorism financing regulations, bolstering the sector’s integrity.” It is advised that in order to quickly address any new risks or malpractices, cooperation between law enforcement and regulatory entities must continue.
Aside from that, the experts urged creating an atmosphere that is favorable to legal forex trading is essential. This entails reducing the number of bureaucratic steps required to get licenses and operate within legal boundaries. More operators would enter the official market as a result of simplified procedures, which would lessen the influence of illegal traders.
Furthermore, market stability and transparency can be strengthened by programs that encourage operators and customers to exercise responsible trading and improve their financial literacy. “Authorities can maintain the momentum of positive reforms and support the long-term growth of Nigeria’s economy by fostering trust and confidence in the forex market,” he said.