Follow Us on Google
Omodele Adigun
Despite being an important player in the financial industry, the Bureaux De Change (BDCs) operators in the country are being perceived as the weakest link in the chain. According to Aminu Gwadabe, the president of Association of Bureaux De Change Operators of Nigeria (ABCON), this is also partly responsible for the reason they are not allowed to trade among themselves like banks by the Central Bank of Nigeria (CBN).
However, that will soon change as the association recently launched its live run automation project for its members.
“We are now going to show CBN that we have a structural base to do these transactions especially by putting tested IT infrastructure in place for our members to utilise,” Gwadabe said. At the launch, he explained how this would impact the nation’s financial sector.
Excerpts:
Automation
The ABCON coordination journey of automation and digitalisation of BDCs’ operations started in 2016. We had several collaborations, meetings, workshops with CBN, Nigeria Financial Intelligence Unit (NFIU) and the Nigeria Inter-Bank Settlement System (NIBSS) before we put this comprehensive business solution for our members. It is going to support them; it is going to enhance them and it is going to add to their margin. Gone are the days when BDCs were making N1 margin if they can embrace this automation. In other climes, what is the margin? N1? Why is Travelex not having BDC in Nigeria? You think an international company like Travelex will come to Nigeria and make N1? No! They will not be doing it. International margin is as high as 10 per cent. But see the population we are giving! Yet we are comfortable with N1 margin. I know the margin is too small. And you will agree with me that the N1 margin is too small.We are using this forum to inform CBN that it should increase it even if it is N5 margin. With this automation, for you to do it well, you really need to make good margin to stay in business. Our theme during this automation launch, “Digitising BDC Operations for Efficiency, Transparency and Regulatory Compliance”, captures the new inventiveness in the sector. The initiative that gives priority to efficiency and honest dealings in line with set policies and regulations. It also makes everyone understand the new inventiveness in ABCON, which is focused on making BDC operations come in tune with the 21st century technology, delivering the best services to end users of foreign exchange.
Forex business is about transparency. It is about integrity. If you don’t possess the two qualities, forget it. I don’t think you can last in the business. We cannot allow dishonest people to come into the sector and rubbish it. So it is only technology, IT, automation that will make us clean and transparent. And that is why we are doing that today. So 21st century technology, high cloud based – all our documents will be kept in the sky, in the cloud. We won’t even need safe again. To say you want to keep those documents that you have, they will be kept in the sky, in the cloud. The truth is that the world is going digital and BDC operators, under the current ABCON leadership, are committed to staying ahead of the competition by deploying time-tested technology to deliver effective services to foreign exchange end users.
Even if you are selling fish, where do you go to? Online! Everybody wants to be selling on the social media. And you that are selling dollars, you want to put yourselves under the table? No! We have to distinguish ourselves. We have to let the world know that we exist! There is an advantage to this. You attract more patronage; you make more margin. We have to compete both locally and globally.
Motives
The objective for making this Live Run operation portal is to enhance BDCs’ compliance with set regulations and promote market integrity. The portal will sustain transparent transactions in the BDC corridor, boost the morale of operators and ensure continuous operations in ABCON.
The ABCON has fully upgraded its Information Communication and Technology (ICT) platforms to achieve full digitisation of BDCs’ operations in line with its goal of sustaining transparent operation and prompt rendition of weekly returns to regulatory agencies. Of special note is also the integration of our platform to immigration platform for the verifications of international passport.
The objectives are three. One is to change the perception: We have a negative perception from the public and regulators and this is due to the nature of our operations. Sometimes you find out that even the regulators themselves don’t even know the difference between a licensed BDC and the unlicensed one. The automation will create that difference and we will keep that clarification that we are not unlicensed BDCs. Before investors can come into the country, they look into the perception of the people doing their own businesses. So that is one way of improving the image of the country. We are automating our operations so that we can change that perception locally and globally.
Don’t forget, this year, 2019 is the year that Financial Action Task Force (FATF) is going to assess Nigeria, and BDCs are the weakest link in the chain. Because of that, we want to improve the entire perception of BDCs’ operations in Nigeria, especially by putting tested IT infrastructure in place for our members to utilise.
The second objective has to do with our internal restructuring. CBN just released the allocation for the quarter. How many BDCs know about forward trading there? Forward had the highest allocation for last year. How many of them know of Financial Market Dealers Quotation (FMDQ)? This is where banks do forward. FMDQ was the number one last year in terms of allocation, and BDCs were second. FMDQ is fully integrated. So BDCs cannot be operating under the table when we are competing with a window like FMDQ. This means we have to brace up in terms of our internal processing. As for our book keeping, we need to do it online real time, computerised. We don’t need to be keeping cash book, sales register, purchase register, ledger, receipts, passport, visa, etc. This automation will do that and even generate receipts, make requests to banks. Sometimes, on the funding day, we don’t even have the luxury of time to go to banks, and we can’t go to CBN. This automation will take care of all these so that, from the comfort of our offices, we would be doing our transactions.
The third reason is supervision. I know the supervisor has a lot of challenges supervising about 4,500 BDCs at once. It is almost impossible! Now, the regulators: CBN, NFIU, etc, don’t need to come to BDCs’ offices and say, bring your books. BDCs have obligations to deliver to (and comply with) regulatory authorities. Now they can do it online for ease of compliance, they can do it in their offices, they can do it on the road. They can send their returns to CBN on the road, from home or from office. Gone are the days when 1,000 or 2,000 of them would queue in order to make fast rendition of returns.
Record keeping
Why do they keep all these records? One of the reasons is for security so that they can be protected. You know this country is under threat of kidnapping, money laundering, etc. We have a lot of experiences where a lot of our members innocently fall victim. There was somebody in Abuja who lodged at Sheraton Hotel. He called one of our members that he wanted to buy $2 million. The man arranged the $2 million and took it to him at the hotel. He did not know it was fraudulent money. Later, they traced the money to his (BDC) account. They asked the name of the customer with whom he did the transaction. He said he saved his number as Alhaji Sheraton. Unfortunately for him, that man that called him bought that number for that purpose. He did not use it to call any other person. As soon as the transaction was concluded, he switched off his phone and threw the SIM away. That was because KYC (Know Your Customer) requirement was not properly followed by him.
Inter-BDC trading
Right now, CBN does not allow inter-BDC trading like banks do. Actually, the complaints of CBN against ABCON is that we do not have infrastructure in place: (They would ask us) Do you have internet? Do you have computers? When we have a robust platform, we are now going to show CBN that we have a structural base to do these transactions so that they will give us open approval so that my BDC can sell to Metropolitan BDC. And then real time online trading would be on. So imagine the transaction that we would be doing that would become official. We are going to ask for more products. This is just only one of them. That is going to come very soon as we progress from operations, rendition of returns; we are going to move on to the online real time forex trading, even among ourselves. Over two months ago, 2,000 BDCs are being configured here in the South West. We have achieved that in all the zones of the country. My records show that 4,500 have done so across the country.
IMTOs’ agents
The CBN has registered 60 International Money Transfer Operators (IMTOs). Annually, the country receives nothing less than $20 billion from our sisters and brothers who are based abroad. This is over half of the country’s foreign reserves. Out of that, only six per cent is captured by CBN. The rest goes under the counter or over the counter transactions without any trace. And BDCs, with our number, 5,000, the highest in the world. Only China follows with about 1,500. With that, you can see that we are the best tool to actually utilise the inflow of IMTOs. So we are telling central bank to make us direct agents of IMTOs. Before, they said we were not structured, that we didn’t have IT infrastructure. Imagine $20 billion coming to BDC sector alone! The rate is even cheaper than what BDCs are buying. Right now, IMTOs are selling at N355/$. We have fought for that. They said in our offices we didn’t have computers; that some of us don’t even have offices. Imagine that. It is a general belief. That is the problem. That is why we are changing that perception. Go to Kenya. An Oyibo man prefers to go to Kenya and spend his money there rather than coming to Nigeria. Why is it so? It is because of appearance. When you go to any BDC there, its office may be too small but it has every technology inside the small office: it has chairs, light, a small computer, internet; it has everything. Just Kenya here o! This shows that appearance and perception are very important.
