The Guardian

ABCON rallies support for CBN’s foreign exchange policy

The Association of Money Changers of Nigeria (ABCON) has expressed support for the recent directive of the Central Bank of Nigeria (CBN) banning the use of non-export home account collateral to secure Nigerian loans.

According to ABCON Chairman Dr. Aminu Gwadabe, the move is expected to increase dollar liquidity, help build up reserves and strengthen the financial services sector.

The CBN's instructions to banks specify that collateral for naira loans must not be denominated in foreign currencies, except for guarantees from foreign banks, including federal government-issued Eurobonds and standby letters of credit.

Mr. Gwadabe highlighted the directive's potential to alleviate undue pressure exerted by large companies and manufacturers on the foreign exchange market.

“The cessation of this harmful practice is expected to not only increase the availability of dollars in the market but also contribute to an increase in foreign exchange reserves,” Gwadabe said.

He also recommended that the CBN review its foreign currency holding guidelines for non-oil export domestic account proceeds, with a maximum holding period of 48 hours and a minimum balance requirement of $5,000 for individuals and $50,000 for businesses, similar to the South African model. It was proposed that it be made into dollars. .

Gwadabe highlighted the role of BDCs (Bureaux De Change) in the market, arguing that despite misconceptions about their operations, BDCs function as effective market management mechanisms.


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