The Central Bank of Nigeria has introduced a policy limiting foreign exchange cash sales to $5,000 for each approved transaction by Bureau de Change operators.
According to The PUNCH, this policy, part of the broader Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for the 2024/2025 fiscal years, is designed to bring more regulation to foreign exchange transactions, enhancing stability and compliance within the sector.
Bureau de Change businesses operate by buying and selling foreign currency, profiting from differences in exchange rates.
The CBN’s directive restricts the amount of foreign currency that can be obtained in cash during a single transaction, an effort aimed at protecting Nigeria’s foreign exchange reserves and reducing the risk of currency misuse.
According to the report, BDC operators “shall continue to observe a maximum foreign exchange cash sales limit of $5,000 per approved transaction.”
This restriction not only impacts how much foreign currency a customer can obtain but also aligns with the CBN’s larger goal of maintaining tighter control over the forex market.
The guidelines also make provision for the pooling of funds by authorised dealers, including BDC operators, as long as the sources of the foreign exchange are clearly identified and reported.
This policy promotes transparency by ensuring that all foreign exchange transactions are properly documented and accounted for.
As stated in the report, dealers must “continue to render appropriate statutory returns on sources and utilisation of funds to the Central Bank of Nigeria,” ensuring that all funds in circulation are properly tracked and accounted for.
In a related move, the CBN introduced stricter regulations on currency movement across Nigeria’s borders.
Any traveller entering or leaving the country with more than N100,000 or the equivalent of $10,000 is required to declare these amounts at the border.
The purpose of this regulation is to ensure transparency in currency movement and improve the accuracy of statistical data collection on such transactions.
The guidelines specify that travellers with sums exceeding these limits, whether in naira or foreign currency, must declare the amounts using designated forms for both import and export purposes.
This declaration is primarily for statistical purposes but helps prevent unreported or illegal financial activities. As outlined in the report, “Travelers entering or leaving Nigeria shall be required to declare any amount in excess of N100,000 and any amount in excess of $10,000 or its equivalent.”
The CBN has indicated that it reserves the right to review these thresholds if necessary.
Another key component of the guidelines addresses import-related foreign exchange payments. Advance payments for imports have now been capped at 15 percent of the free-on-board value of each transaction, a measure in line with the Public Procurement Act of 2007.
BDC operators have expressed concerns about the new regulations. The Association of Bureau de Change Operators of Nigeria has raised objections to the new licensing guidelines. While the CBN maintains that these changes are intended to streamline operations and improve financial accessibility, BDC operators argue that the guidelines contradict global best practices.
When contacted, the President of ABCON, Alhaji Aminu Gwadabe, acknowledged the $5,000 limit but explained that it was not a new regulation. He stated, “The central bank is just advising us to abide by the guideline.”
The CBN further emphasized restrictions on Business Travel Allowance and Personal Travel Allowance, capping them at $5,000 and $4,000 per quarter, respectively.
As per the guidelines, “Business Travel Allowance and Personal Travel Allowance shall be subject to a maximum of $5,000 and $4,000 per quarter, respectively.”
Meanwhile, existing BDC operators in Nigeria have been instructed to reapply for new licenses within their chosen category.
Despite concerns from the operators, the CBN is committed to enforcing these changes, viewing them as necessary steps towards improving transparency and compliance within the foreign exchange market.
