Reducing the number of Bureau de Change (BDC) operators in Nigeria will not fix our forex crisis and Tope Fasua should not advocate for that. Nigeria needs to focus on the root cause of this problem, and the number of BDC is not one. The root cause is lack of parity between the supply and demand of US dollars in Nigeria, and floating Naira which I think is a bad policy, did not model that asymmetric imbalance.
Nigeria’s forex crisis, which has thrown the country’s economy into disarray – pushing the government to the limits in its search for a solution, has seen varying degrees of suggestions from experts, state and non-state actors proffering solutions.
Consequently, the Nigerian Presidential Adviser on Economic Affairs, Tope Fasua, has recommended a significant reduction in the number of Bureau de Change (BDC) operators in the country. He suggests reducing the current number of over 5,000 BDCs to approximately 200, which would amount to a 95% reduction.
He made this call while speaking at an economic policy event organized by the Abuja Chamber of Commerce and Industry. The event’s theme was “Unification of foreign exchange and the effect of fuel subsidy removal on the business community.”
Unless you bring parity to the demand and supply, Naira will continue to struggle, to settle at an optimal equilibrium. On the day this policy was announced, I wrote here that it was not well designed, just as I noted that Nigeria will return to fuel subsidies if we have not already done so, since as FX and international crude oil price continue to increase, the local price of petrol has largely remained the same, meaning that the government is paying the variance. In a full subsidy regime, we would have seen an increase at the pump price!
When you are struggling to balance your budget, you do not ask your bank for a thinner cheque book, to save cost. And Nigeria cannot think it can float Naira without controlling the air Naira operates. That “air” is production which includes old and modern factories. They supply the air for Naira to breathe and float.
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When the leaders are clueless, they apply cosmetics and the barest minimum to challenges with obvious solutions.
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They will still argue –— Chukwunedum Ekwenibe (@MiriEnweIlo) September 27, 2023
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Comment 1: Ndubuisi Ekekwe , I understand your view which should be the core of our solution to Nigeria FX issues. Ndubuisi Ekekwe , what will be your short term, medium term and long term strategy.
Strategy to reduce unnecessary demand, strategies to improve supply.
Prof, our supply from production might not happen overnight, but reduction of unnecessary demand might be a feasible and viable short term stray.
Ndubuisi Ekekwe , what is your take
My Response: “what will be your short term, medium term and long term strategy.” – return back to the status quo as at May 29. Use the next 6-9 months to deepen production capacity, then begin to implement these new policies. Sometimes, not doing anything may be a better solution. Yes, NOT floating Naira, immediately. I have put my ideas and I do not need to repeat them in all posts. Sure, any person can question my positions – that is demoracy.
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They have started again, as always, a bad workman blames his tools, and not his incompetence. How exactly will reducing number of BDCs make dollars abundant? What is the current demand-supply ratio? We do not need more of dumb suggestions, if you don’t know what to say, simply pretend and keep quiet. Emefiele even suspended license, shutdown AbokiFX, banned crypto, did naira climb? Enough of the yeye talk.
The truth of the matter is that those holding power cannot do this thing, because the people who can help naira with their investments do not trust them, if you ignore this critical point, then you still don’t get what’s going on. The way naira is going, it first needs a belief in, to slow the erosion down, before any meaningful investment can materialize. Some things are beyond making noise and grandstanding, you see this one? It’s past their pay grade, it’s the reality.
The new guy nominated to lead the CBN, what’s his opinions in the last ten years regarding monetary and fiscal policies, including exchange rates stability? Any videos and articles? All we were bombarded with were schools he attended and places he had worked, which of those things lend credence to being able to lead our monetary policy? The joke is too much.