Abuja BDC operators shut down in protest, cite Dollar scarcity and policy concerns

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In a move likely to further exacerbate dollar scarcity in Nigeria’s capital, Bureau De Change (BDC) operators in Abuja have embarked on a two-day service suspension effective February 1st and 2nd. This sudden shutdown comes hot on the heels of the Central Bank of Nigeria’s (CBN) unveiling of new policies aimed at curbing foreign exchange (FX) losses incurred by banks due to market volatility.

It was also learnt that Abdulahi Dauran, the chairman of the Association of Bureau De Change Abuja chapter, issued the directive to stop sales as the exchange rates in both the official and parallel markets have become unfavourable.

Also speaking on the issue, Aminu Gwadabe, the president of the Association of Bureaux De Change Operators of Nigeria (ABCON) said the suspension of service is not the position of his association.

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Asked if the traders ceasing operations are not members of ABCON, he said: “Yes, we have our National executive council and it is only that central organ of the association that can issue such directive and as a professional association and complaints institution we believed in collaboration and engagements which is presently on going.”

“We are professional and regulated institutions. But [are] continuing engagements with relevant agencies.”

While the official reason for the BDC operators’ protest remains under investigation, sources within the industry point to two key factors:

Dollar Scarcity: BDC operators allege a significant shortage of US dollars, making it difficult for them to meet customer demand and operate profitably. This scarcity could be linked to the CBN’s recent directive restricting dollar sales to BDCs, effectively channeling them through commercial banks.

Policy Concerns: Industry members reportedly express concerns about the new CBN policies aimed at curbing FX losses by banks. The exact nature of these concerns is unclear, but it is possible they relate to potential restrictions on BDC operations or increased regulatory scrutiny.

The impact of this shutdown is likely to be multi-faceted:

Increased Dollar Demand: With BDCs out of action, individuals and businesses seeking foreign exchange will have to rely solely on banks, potentially leading to longer queues and higher transaction costs.

Black Market Surge: The reduced access to legitimate FX sources could push some individuals towards the black market, further destabilizing the exchange rate.

Economic Uncertainty: The shutdown highlights underlying tensions between BDCs and the CBN, potentially creating uncertainty for businesses and investors reliant on stable foreign exchange availability.

While the duration of the protest remains unclear, it underscores the complex dynamics surrounding Nigeria’s foreign exchange market. Both BDC operators and the CBN need to address the concerns and find a solution that ensures accessible and stable FX rates for all stakeholders.