The clampdown on currency traders by State Security Service operatives extended beyond Lagos and Abuja as several Bureau de Change offices were raided in other major cities across the country on Friday.
But, the raids are continuing amid criticisms by some analysts that the exercise, rather than a civilized way of sanitizing the currency market, showed a failure by the Central Bank of Nigeria to enforce compliance to its rules and regulations.
In Kano, the largest city in Northern Nigeria, about 40 people were arrested when security operatives stormed offices and currency markets in search of dealers allegedly selling foreign currencies above the official rates.
A similar exercise was reported in Anambra, with scores of alleged offenders whisked away by security operatives after a visit to some markets in Awka and Onitsha where foreign currencies are usually sold.
Several others were equally arrested during the raid in Lagos and Abuja.
PREMIUM TIMES had reported how a meeting between the SSS, the Bureau De Change operators and Central Bank of Nigeria resolved to embark on the clampdown on money changers refusing to sell dollars to buyers at the N400 fixed rate.
The resolution at the meeting was said to be one of the ways government believed would help stabilize the exchange rate at acceptable level and make the scarce foreign exchange available to importers and businessmen.
The CBN had decided to allocate dollars to licensed money changers through Travelex at about N381 to the dollar, to enable them sell to end users at about N385 per dollar.
As part of the guidelines, the Central Bank directed the operators not to sell foreign exchange above two per cent margin of the buying rate, approving buys outside of Travelex at N390 to a dollar.
Initially, the clampdown appeared to have positively impacted the FOREX market, with the Naira value, which plunged to as low as N480 to a dollar at the black market, gaining some strength, selling at about N455 to the dollar.
The respite had emboldened the CBN to encourage the SSS to step up the raid. But, this time the exercise appeared to have attracted negative reactions, as the money changers were forced to go underground to escape arrest.
The development worsened the FOREX scarcity problem, with some operators who braved the threat of arrest selling dollars at a much higher rate to buyers.
There were reports that some money changers, particularly those unregistered, have been engaging in some illegal activities considered to be undermining the foreign exchange policy of government.
Odilim Enwegbara, the Chief Executive of Pan Africa Development Corporation, said there was nothing wrong with the SSS raid on the BDCs if Nigeria was genuinely determined to build a modern economy.
“Most of these black market operators are being used by those involved in money laundering,” Mr. Enwegbara, an Abuja-based financial analyst, said.
“In modern societies, this type of money market is not there. That is why Nigeria should do away with them. They are the ones that make the exchange rate to continue to go up, despite government efforts to stabilize the market.
“In other climes, BDCs are found mostly at airports for travellers. They are very organized. There, they will collect your foreign currencies and give you local currency and a receipt for your transaction.
“Here, some of these BDCs even give fake dollars. If we want to build a modern economy, we cannot afford to have those kinds of operators around.”
In his reaction, the Chief Executive, Global Analytics Consulting, Tope Fasua, said although he supported the regulation of the BDCs, he was not comfortable with the approach of the SSS.
“Certainly, getting the BDCs to operate in accordance with the rules is the best way to go. However, Nigeria is the only country in the world with 3000 or 4000 BDCs all over the place.
“The number of BDCs registered in Nigeria is almost equivalent to the number registered all over the world,” Mr. Fasua noted.
“This is unbelievable! In other places, you find BDCs may be at the airports. Here, everybody who once worked in a bank wants to be a BDC operator. The CBN must find a way of limiting the BDCs to about 100, for it to know who it is dealing with.
“We hear some of these BDCs are owned by even officials in CBN. This has to stop. Many of them are established for criminal purposes. But, I am against the federal government’s decision to use a jackboot approach.
“I know we are living in unusual times. But, most of these BDCs are running a racket. It is better for them to be shut down, so that their operators would go and look for a proper work to do,” he said.
The Lead Director, Centre for Social Justice, Eze Onyekpere, blamed everything on the failure of the CBN and the other regulatory agencies of government to play their roles.
“Is it the responsibility of the CBN or the SSS to regulate the BDCs? Is the SSS acting on the instructions of the CBN? What is the CBN that has the responsibility to oversight the BDCs, including licensing, doing? What messages have they been sending out?
“These are what potential investors are looking out for in the rule of law in the management of the exchange rate of the national currency. Where there are infractions, there must be a procedure for investigating whether the BDCs are playing by the rules.
“That should be within the supervisory jurisdiction of the CBN, or any other agency charged with that responsibility. But, the braggadocio approach or use of brute force by the SSS is not the right way to go. Clearly, they are violating the laws,” Mr. Onyekpere said.