Aminu Gwadebe, President of the Association of Bureau De Change (BDC) Operators of Nigeria, has unveiled that a significant portion of diaspora remittances is being redirected by certain fintech and unlicensed companies. This revelation comes as Olashodun Shonubi, Acting Governor of the Central Bank of Nigeria (CBN), attributed the diversion of remittances to the parallel market as a cause for the naira’s decline against the dollar.
Unveiling the Diversion of Remittances
Gwadebe stated that after a meeting with banks to address the issue and increase liquidity through proper channels, the banks did not fully cooperate. As a result, remittances are flowing outside the country and being used for various illicit practices, including trading in banned items.
Furthermore, Gwadebe addressed allegations against BDCs regarding their involvement in the parallel market and illegal activities. He clarified that there are different types of BDCs, and while some do not officially report receiving diaspora remittances, any BDC not providing accurate transaction returns will face immediate consequences as per the CBN’s intentions.
Fintech’s Role in Diverting Remittances
Certain fintech companies are allegedly channeling remittances through unconventional avenues, including platforms without standardized regulations. Gwadebe mentioned platforms like Binance, which operate across various jurisdictions without a clear geographical presence, making them difficult to regulate and track.
The Federal Government’s Role
Gwadebe recommended stricter measures for market players involved in such activities and advocated for an expanded BDC business model beyond the conventional cash approach. He highlighted the need for a more level playing field where licensed BDCs can engage in online activities under appropriate regulations.
The Central Bank of Nigeria recently announced additional guidelines for BDC operators to enhance the efficiency of the foreign exchange market. This move marks a change in CBN’s stance, reallowing BDCs into the market after their previous ban in 2021. The new framework enforces a specific spread range for buying and selling activities conducted by BDC operators, ensuring greater oversight and transparency within the sector.
The revelation of diaspora remittances being diverted by certain fintech and unlicensed companies highlights the need for stricter regulations and a level playing field to ensure transparency and stability in Nigeria’s foreign exchange market.
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