Barely three weeks after he assumed duty as governor of the Central Bank of Nigeria, Mr Godwin Emefiele has been summoned to appear before the House of Representatives Committee on Banking and Currency. This followed a debate on “a matter of urgent national importance” prompted by the CBN’s new guidelines for the operation of bureaux de change in the country. For good measure, the House said it had suspended the policy.
The apex bank had, in a statement published last week, raised the capital base of BDCs from N10m to N35m as well as increased the licensing fee to N1m and annual renewal fee to N250, 000; the application fee remains unchanged at N100, 000. Under the new plan, the amount of foreign exchange issued to BDCs each week will be reduced from $50,000 to $15,000. The measures, the bank said, are meant to check the nation’s depleting external reserves and reverse the incidence of unauthorised transactions. BDCs were given a deadline of July 15 to comply.
As we have stated in the past, it is within the House’s jurisdiction to summon any head of a government agency in the legitimate pursuit of its oversight function. In this case, however, regulation of BDCs is squarely within the legitimate functions of the CBN. If the House had any questions to raise about the likely impact of the policy, there are less dramatic ways of getting the answers from the apex bank than directing it to suspend a policy it has already announced to the world.
The House should therefore not constitute a pain in the neck of the CBN. Since the CBN’s job includes regulating banks and other financial institutions including BDCs, it should be allowed to do its job without interference. As could be gleaned from the debate in the House on Thursday, members were sharply divided in their support and opposition to the new CBN requirements. While some opposed the policy on the grounds that it would create unemployment among illegal currency hawkers (believed to be working for the BDCs), others supported the CBN’s move in the expectation that it would strengthen forex transactions.
Why would anybody oppose a policy aimed at tackling saboteurs of the Nigerian economy at this time? Just as the banking consolidation of 2005 reinvigorated the banking system, checking the activities of currency traffickers masquerading as BDCs is sure to add fillip to the nation’s financial system, especially with the coming of cashless banking.
We urge the apex bank, however, to ensure that confidence in the system is improved by strengthening its management framework and the governance structures of the BDCs. Requesting an asset base of N35m alone will not prevent abuse of the system if the supervision framework is weak. At present, Nigeria boasts more than 5, 000 BDCs even as applications for more are waiting. Some people own scores of them just to buy forex from the CBN.
If for the sake of respect, the House should not compel Mr Emefiele to spend his time on the floor of the House so soon. The directive on BDCs is his first major policy as CBN governor. He and his team must have thought it through.