 Welcome once again to the breakfast here on plus TV Africa our first major conversation this morning is on the new CBN ban on Forex To a bureau bureau the shanja operators here in Nigeria the CBN says that there's more than 5,000 of them that have been running and Their concerns that have led to this new policy and this you know ban And it has also directed commercial banks to take over the trade of Forex here in Nigeria We're speaking this morning with Iodile Balugu a foreign exchange trader who's joining us via zoom in Abuja. Good morning And thanks for joining us. Mr. Balugu Good morning. Thanks for having me on the program. Great to have you Let's first of all start with the concerns of the CBN and the reason for this policy or this ban on Forex to BDCs. They of course cited fraud and mismanagement of the whole process Tell us about, you know, what you know about that and how bad it it really is before this decision was taken Okay, over time CBN Going through the regulatory and supervisory Function Things that some BDCs are capable of using their operations as a conduit for illicit Forex flows and graft CBN overtime Thinks that there has been some product actions that has passed through BDC BDC accounts However, what we think from the from this side Not from the regulatory side is that if there are people if there are operations If there are companies that have been found as corporate Then rather than Rather than sanction the old operating the old body of BDC operators Why not pick out those people? Those operations those BDC companies and then sanction them rather than cutting out everybody as a whole Well, do you do you think that would work? You know, and do you also think that the CBN may have tried that and realized that that wasn't, you know working. Oh Well Will it work? Yes, it will work because Everybody that sees that there is sanction and some people have been sanctioned and they are bearing the brunt for being sanctioned Will put their operations in order. It's the same thing that happens in banks CBN sees that some bands are call people of some things They call them to order the sanctioned them and other banks put their books right So it's the same thing that happens. Nobody wants to be caught out of business Nobody wants the source of livelihood to be taken out of them just like that So if truly they have been sanctioned if it has been happening and there's been and they have been sanctioned and people can see They can find evidence to the fact that Companies BDCs operators have been sanctioned then everybody will follow suit and make sure that your books are put in order Okay, can you share an example before move to you know other angles? Can you share an example of? You know what you mean by you know being fraudulent with this, you know, and you know participating or and you know engaging in fraudulent FX transactions there is I believe a Maximum limit of trading that a BDC can involve in daily Are you saying that there's some of them that were going way higher than you know what the limit was? Okay, so based on the guidelines from CBN BDCs are supposed to From the funds that they get from CBN the funds that BDCs get from CBN. You're supposed to use the funds for PTAs For business travel allowance BTA for medical fees for school tuition You're not supposed to go above a limit of them 4,000 for personal travel allowance and $5,000 for business travel allowance That is what that money is meant for Normally if you have to do a transaction outside of the funds that is coming from CBN You're not supposed to do anything more than 10,000 per transaction. That is what's the BDC operation. So you can have like a Five different people come to you in a day, but you're not supposed to go above those limits in dealing with them otherwise the transactions become Suspicious and they are thrown open for investigation by the body by CBN So exactly what what CBN wants is BDCs should abide by those rules There are some people that have been caught. There are some organizations that they think are Doing things that are outside of that, but you find them and then you you put them in order You put them in order. That is what I think from my own hand. Okay the Guests I had earlier This morning had mentioned that he believed that it was a great policy And this was one way to stabilize the Naira instead of having you know foreign exchange being marketed across the whole country You can really just limit the amount of people who have it and of course that is you know pushing it to just commercial banks Have better policies regulating it and all of that. So don't you see that as a positive to this? Okay, good. CBN has very good intentions. Okay, the intention is very good, but are we right for it yet? I don't think so. It's a very good policy if CBN wants Users of FX to get it from the bank then fine However, I will write for it yet as a country. No, I don't think so if I might state The current the current solution that CBN is given right now still looks very short-term in nature in nature Okay We have not addressed the issue of supply as it's where yet because I think that is where the problem is The supply into the country you see that over time CBN has brought in so many policies to encourage people to Influence down into the country and that is the issue. We need to address for for now The Nigeria is not generating enough revenue at the moment to take care of its own expenses and you will see every day For example, the foreign direct investment recently was set to have reduced by about one million dollars That is extra one million dollars that would have come into the economy and would have gone in circulation For what we need to do if you can give me a little bit of time to expand sheets and speak on this we will see that There is reduced income from could all CBN has tried in so many ways to encourage remittances of effects into the country with laudable policies which Some of them have been good. Some of them have been courage influence of ethics, but still it is not enough Nigeria's the country is still in net imports. I will do more inputs than exports in the country Ranging from raw materials to finished goods. The question then arises as a government Are we exporting enough? Are we encouraging our local manufacturers? Are we encouraging our local companies to export out of the country? What is the quality of goods that we are exporting out of the country? Is it? Is it our goods that we're exporting out of the country can they stand side-by-side with other similar goods out there? Outside Nigeria have we created an enabling environment enough to favor the production of such goods Those are things that we can do to encourage the flow of effects into the country as a country There needs to be a clear direction a vision that everyone can see in a glancing towards or where we are headed What we need to do from top to bottom in achieving these goals look at this policy for example Yes, you know that this is what CBN wants the banks to do But there is still no clear direction as to how to go about it even for the ordinary citizen You go to a bank today. You tell them that you need Dollars you need effects and they will tell you to come back tomorrow that they don't have enough CBN equipped the banks enough to be able to meet quiet demands Those are questions that we still need to ask ourselves if you look at other countries for example the When the governor was talking about It is only in Nigeria that they release Effects to be this is you look at other countries for example be this is don't even need to rely on the government And we asked ourselves what those other countries are doing for be this is not to rely on the government Are we doing it here in other times the major source of effects? Constructorism look at Maldives look at seychelles look at Dubai look at even London each rule the ballroom of people that anytime to the intro Airport on a daily basis is enough to generate effects If you have about four million people coming into this country every day with four thousand dollars each You can imagine how much that will be on a daily basis Amounting into inflow of Forex coming into the country those are things we need to do We are looking at the tourism atmosphere in Nigeria and we are saying have we done enough? Have we done enough in terms of exporting other goods outside the country? Have we done enough then one good thing that I also like to state here is this I think CBN has not realized the usually is about supervision and monitoring and Regulating the BDC activities as CBN realized enough the power that lies within technology To really curtail and do this thing very well So there are things that will be done internally simple things that could be done internally Respect to supervision and the controlling the operations of BDCs by each channel's Technology that can curtail the activities of these BDCs We cannot keep on working ordinary and expecting the extraordinary to happen for your country as divers and Multitalented as us. I think there are so many things we look at. I'm not just creating the policies which So looks a little bit short-term ish in nature Let me take a pause there. Okay, Mr. Valogone next question would be the effects that this might have We've seen in the last 48 hours the exchange rate rises as high as five hundred and twenty two Naira to a dollar So so is that one of the effects that you know, we should be worried about is there a possibility that it will continue to rise? Okay, the initial Ike the spike you've seen in the rate is as a result of speculation Like I said when I was talking earlier, everybody needs to have a clear direction You need to know what's what is expected what the Sibian is trying to drive at at the moment the As as much as the BDC operators are panicking. They don't know what to expect from the policies Even consumers who are panicking. They are not sure where what direction CBN is headed Because consumers bear this brunt at the end of the day Like I said earlier when you go to the bank and you have for example for pity sometimes You're supposed to get four thousand and the bank is telling you drop your documents come back into this time And then you go back into this time Maybe the bank is giving you like one thousand five hundred dollars Instead of four thousand and they tell you that that's all they can give you because there are so many people on the queue They have to serve and the money is not enough to go around the queue So they ration it out for customers and consumers are like Um, so everybody is scared if I go to the bank today, will I get effects? Will I get the dollar? So if I have to go to the BDC, let me go to the BDC. BDC is looking at it. I have limited supply From this limited supplier Do I know if it's enough to cater for the number of people that is going to come in? And you know what happens in the comics once the demand is very high and supply is very low Automatically the rates the prices are affected So what you've seen recently is just like a spike that is as a result of speculation And um, it needs to have a clear direction as to The policy however In the long term the forces of demand and supply will come into place and when the direction is a little bit clearer We can all know. Okay. Good. This is where the land Denyra is going to land in terms of its trend against the dollar for example So in the long term first of demand and supply will come into play And that has what that is what has always driven The parallel markets the forces of demand and supply when demands are high you go to the parallel market You see that the rates are high. Yeah, sometimes there was a time CBN was given BDC is quite some influence which is more than what they were given before this recent ban And what happened then most BDCs were making losses because the the supply was so high and it overshadowed the demand So much so that BDCs were closing down operations Back then BDCs were closing down operations because they were running at a loss And it's not just that BDCs come today and they say that this is what we want to do Okay, they agree that today we want to sell dollar at $550 and everybody goes like a band wagon and say my dollar is 550 no it's response basically to market forces So when the supply is high you see that rates go low in the BDC market When demand is high the rates spike up a bit in the BDC market. It's just basic basic forces of demand and supply and over time I believe that This will come into place once there is a direction from the CBN policy What they intend to do and what they intend not to do and everybody will know where the naira really is All right, so there's also a possibility it might even go higher depending on how this turns out Oh, well, so let me give you an example. Sorry. I hope um, I hope I still have enough time to talk about this Yeah, yeah But but I want to I want to you know quickly I'm sure you still have a little bit to say but I want you to respond to this also There's the conspiracy theories that I've said because of the lack of control that you mentioned That you know banks will simply sell to bdc's bdc's then will you know, of course, you know from the back sell to Consumers and that will you know make the the exchange rates continue to even go higher because everybody needs to make some profit Do you see that as a possibility? Oh, well, like you said, it's a conspiracy theory I really don't have so much idea about what goes on in the background and I'm not that well connected to to give you Um, a factual response to respect to that. If it's a conspiracy theory, let's leave it But at the end of the day, um, whether the theory is true or not Like I said, it will always bear its, um, effects on the market That's when you see where the rate lines at the end of the day Whatever thing that happens at the background And will always come to the forefront at the end of the day to determine what the rates what the rates will be I was going to say something earlier with respect to that. Um Sometime 2016 something like this happened when there was a ban from cbn And before the ban happened before the ban happened, um, dollar was at about, um, 270 65 70 there about At the end of the day because of the shortage of demand banks couldn't meet the demand from clients from the citizens alike And then they had to the pressure was so much on the bank and they had to fall back on the parallel market When they fell back on the parallel market because the parallel market the PDC's and so they had little supply Demand was high Rates went up and at the end of the day when cbn was going to realize that this thing needs to be reversed because We are not yet right for it Rates had already gone as high as 495 nera from about 270 nera within the space of about 10 11 months 10 11 months we are looking at an increase of about close to 50 percent So I hope that does not happen at this time and at and this time an age where Things are not so easy for the common citizens things are not so everybody is trying to put in things That can end them a source of livelihood I hope that does not happen because the resultant effect of that is if it happens Then even the tomato seller In the market to tell you that ah, oh god, you know see how much they sell dollar now Everything goes up inflation and everything. So I hope cbn has just put in a lot of things as a background to ensure that Um, the effects the negative effects that might come from these are being curtailed Well, we have seen you know similar knee-jerk reactions A lot of times, you know in in Nigeria. So Hopefully like you've said, you know, they've put in the checks and balances There's one of the stories that we shared in the news this morning And that is from bank CEOs who met and said they are ready and they will be able to handle it Uh, should Nigerians trust those statements? Well, the statement is just coming out Nigerians can Be at ease. Whatever happens is that what cbn is trying to do? Let me put this straight. What cbn is trying to do is at the interest of every Nigerian What the bank CEOs are trying to do is at the interest of every Nigerian What bdcs have been preaching is at the interest of every Nigerian I can tell you for a fact that before this came up before the ban came up the association of the root the change um Um operators in Nigeria I've met with cbn time and over again to see how these rates can be reduced So we can just say that the bdcs are the bad eggs The bdcs are also trying to look for what can be done to reduce the rates So what everybody's working on is at the interest of every Nigerian However, the approach from every angle from every industry might be different The way we are looking at it the way bank the bank CEOs are looking at it The way cbn is looking at it might be different and there needs to be a convergence of ideas You can't just take out a key stakeholder And then say that you are ready to work with another key stakeholder Everybody automatically as much as you want the interest of every Nigerian Would also try to protect his own interest because that is why we exist as companies so Whatever the bank CEOs are doing to ensure that these needs are being met Fine as long as it works in the interest of every Nigerian But what I would like to say also is that We have undermined in Nigeria so much so we've undermined the power of technology um in my company for example We put in a lot in technology to see how we can reduce the effects of the shortage of the supply in the in the in circulation and if we can come together and Find a channel through which it is easy to pass money from one place to the other legitimately Which technology can achieve you don't have to send in paper Document here and there we have the big end. We have so many things going on for us that we can work with So it's not just easy to say I was trying to talk to someone Yesterday and I was saying it's not just easy to say that because a baby is crying from headache You cut off the head Okay. Yes, it's a solution to cut off the head. The baby will stop crying automatically and the baby will stop to exist however There are better solutions to cutting off the head Thank you. Okay um, you're you're um, you mentioned your bdc operator. So I want to um, you know, ask what you know next You know for the thousands of them across the country that seem to have been put out of business Um, what what does you know, what are the conversations like in those spaces? Okay, so for bdc is what I can tell you for For sure is bdc's the ban has not The ban is on the release of effects from cbn to bdc's It has not stopped bdc operations Okay I can tell you for a fact that bdc's will always have a way to source for effects from the normal consumer out there That wants to buy 100 dollar 500 dollar wants to exchange somebody that is just traveling into the country As some smalls depends on him or her. There will see the ways in which we can source Effects from one consumer to the other okay, um The supply is no The supply will definitely reduce because one of the major sources of supply is from the cbn So if for example, somebody goes to the bank now and is unable to get his pta or his pta complete Or a medical fee or school tuition complete the person still has to fall back to the bdc To see how we can augment to make sure that such demands Are being met. So there will always be business for the bdc as long as their licenses are not revoked yet. They can still operate um It's it's it's mind. It's like removing the engine What is happening to the bdc to the bdc knows like removing the engine of their operations, but One way or the other Walk will still go on and yes, they what they do the volume might be reduced but what will still go on One way or the other i'm going to actually two final questions the first one I'm not sure if you would want to speak on this, but Can you share with us from your time as a you know as an operator? Do you think that there are tiny loopholes here and there through which bdc operators can get? From the banks now and still sell. Do you think those loopholes still exist in our system? Um, like I said, I said something when we're starting this discussion. I said Nigeria is not right for some things yet. Yeah Okay um cbn has tried to put in a lot of guidelines restrictions respect to bdc operations And yet cbn is still coming out to say that some bdcs have been found wanting respect to meeting the the Ropes of the guideline Some have been found as has been conduit for illicit funds and so on and so forth despite all these that has been put in um, some people are still some operators are still Doing what is not expected of them It's just like that. So have we done anything to make sure that what they were doing is being curtailed now I don't think we've put that in place. So even if the thing is going to the banks The same way it was done before it might still continue like that And that is why I said it's like having a view if you you have a building The building the structure. There's a structural defect. You can just remove the roofing sheets and say that the building is okay Okay, there has to be some work that is being done at the foundational base to make sure that some things are being caught out to Prevent such occurrences later in the future no matter how much you paint the building Disruptive defects will still be there. Yeah, absolutely. And, you know, if you can in a minute or less Share with us once again ideas of CBN all the Nigerian government should be able to adopt to increase the inflow of Forex into Nigeria We seem to Not put in too much effort into that. There's so many so many ways that this could be done Okay, um, I stated a few things earlier, which I would like to reiterate on the first respect to tourism tourism is You see african countries that don't have any resources and they've worked on tourism and Every everybody from every country wants to go there to even have a visit You're going to such countries Most people leave you're going with your family four thousand is not even in four thousand dollars Is not even enough for you to go with your family by time you look at hotel expenses You go there. You don't want to spend three days You're looking at spending about a week or close to two weeks hotel expenses accommodation Feeding you have to go to tourist attraction tourist attraction centers You have to pay to be able to use any of the facilities You look at it and then you find other people don't even just go to one country nowadays So you see somebody for example going to a country like, um, singapore And then you go to dubai first in transit You spend a few days in dubai transit before you go to singapore You spend some days in singapore and then on your way But maybe you're coming through another country like There's tourism is one area we need to look at The government needs to be able to designate Some places in nigeria some states in nigeria some key areas in nigeria that would be good for tourist attraction That is number one number two. Um, what goods are we manufacturing out there? We have the crude oil apart from the crude oil What else is nigerian known for in the global space for um exports? That can stand out. You see there was a time the government was telling the importation of um things as small as toothpick To speak if there's a country that is producing that toothpick and is sending it was in nigeria But I can tell you for sure that even the toothpick we produce in nigeria today Is not of the standard and quality of the toothpick that were imported So if we export our own toothpick, is there any country that is willing to buy from us? We need to look at the quality of the goods that we produce here So there are so many areas we can look at and say that nigeria needs to do better as a country Like I said earlier they replace for ambition and we need to be ambition ourselves And let us run through the mind of every citizen that at a glance I can say that This is what nigeria stands for and this is where nigeria is headed towards All right. Ayodhili Balogu. Thank you so much for your time this morning Interesting conversation and we look forward speaking with you again I hope I'm not speaking too much. Thank you Thanks for joining us All right, stay with us here on the breakfast. We're now going to be speaking with Ibrahim Ushinowo He's a risk management expert and Ussay and Neni They're joining us next to speak on the reconciliation between Attiku Abu Bakr and Yasum Wike and what this means Um for the strength of the PDP as an opposition party and of course for 2023 That comes up right next after the short break