THE Association of Bureaux De Change Operators of Nigeria (ABCON) said the operators of Binance are influencing and manipulating Nigeria’s foreign exchange market, riding on poor insufficient dollars to the Nigerian economy.
The Association said, despite the ban on Binance operators by the Securities and Exchange Commission (SEC), the borderless nature of its transactions influences the direction of Nigeria’s Forex market amid dollar liquidity problems.
The Chairman of ABCON, Aminu Gwadabe, told THE ICIR that the situation is further worsened by Nigeria’s liquidity problems, arising from poor supply of the dollar to the economy, amid Nigeria’s weak export market earnings.
“The foreign exchange unification policy wasn’t properly thought out and doesn’t have proper shock absorbers, and that is why the transaction has been hijacked.
“In Binance, there is more liquidity, and it is having a huge influence on Nigeria’s currency market. Binance is the anchor; for instance, it closed at N881 the other day and has been determining the market direction in Nigeria’s currency market,” he said.
Commenting on difficulties in the government’s restriction of Binance operators, Gwadabe noted that its operations are largely borderless.
“For instance, if you’re banning it in Nigeria, whereas it is operational in Ghana, Kenya and other African countries, people would find a way around it because it is a borderless transaction market.”
He suggested that the only way to solve the Binance operator’s influence was to have an alternative supply market through a retail end to the BDCs.
“There should be a competitive open window for the diasporans to enable more inflow of liquidity on the supply side. Banks are mopping the dollars, opening their apps to collect more from diasporans,” he said.
He further said that the retail end of the BDCs should come from diaspora remittances, international logistic firms and International Oil Companies who should sell to BDCs to diversify the market controls.
He suggested that the government inject finance and intervene in the currency market periodically to facilitate currency stability.
As a result of continued downward trend of the naira against the dollar, the Economic Intelligence Unit (EIU) has predicted Federal Government’s intervention in the exchange rate movement over apprehension the naira could plunge uncontrollably.
The EIU believes that the Central Bank of Nigeria (CBN), which manages the country’s exchange rate movement, lacks the experience to handle a floating forex regime.
The President Bola Tinubu administration has made foreign exchange unification a key component of its policies, which has seen the naira struggling to maintain a handsome level against foreign currencies, especially the dollar, the euro, and the pound sterling.
Economic watchers also argue Nigeria’s weak export earnings and external reserves would not be able to serve as enough buffer to hedge Nigeria’s forex problems.
A development economist and Budget expert, Oluseun Onigbinde, said Nigeria needs to urgently get ramp up its export to earn more dollars and strengthen its competitiveness.
“If Nigeria ramped up its oil production to four million barrels per day mbpd, did gas production of 150billion cubic meters annually and had $30 billion in agric exports, it won’t have currency issues,” he said.
He stressed the importance of Nigeria making its exportable products competitive in global markets to enable it to solve its currency problems.
“The question forever remains: what will Nigeria sell to the World,” he asked.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.