Bureau Decline Operators
Change and decline.
That’s pretty much all that Bureau de Change operators in Nigeria oversee.
Operating as a black market, the BDCs get their spread from lower values of the naira against the dollar.
In a bid to revise the regulatory and supervisory guidelines for Bureau de Change operations in Nigeria, the Central Bank of Nigeria has revoked the licences of 4,173 Bureaux De Change Operators(BDC).
A Bureau De Change is any company licensed to carry out small-scale foreign exchange services in Nigeria, whose sole objective is carrying on such business on a stand-alone basis.
As of March 2024, when the licences of BDC operators were revoked, the number of BDCs in Nigeria was 1,517, a decline from 5,690 in 2023. This is the smallest number of operators since 2011.
According to the apex bank, the affected BDC operators failed to observe at least one of the extant regulatory provisions for Bureaux De Change operation in the country, such as payment of all necessary fees, including licence renewal, within the stipulated period, the remit of returns and violation of Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT) and Counter-Proliferation Financing (CPF) regulations.
This development is part of a broader strategy to rebuild trust and credibility in the country's foreign exchange market.
We hope the spared 1,517 Bureau de Change will work to bring the Naira up and no longer down.
Africa After AfCFTA: Internal Trade Declines
African countries still trade more with countries outside the continent than with each other, a report by the Economic Commission for Africa has revealed.
This undermines the essence of the African Continental Free Trade Area (AfCFTA), which aims to enhance intra-African trade across all sectors of Africa's economy.
Before the African Continental Free Trade Area arrangement was launched officially in January 2021, the level of trade and economic interactions among African nations was low, but it was predicted to grow after implementing the AfCFTA.
In 2021, total intra-African trade as a share of global trade still stood at 14.5%. However, it declined to 13.7% in 2022.
Over the same period, intra-African exports decreased from 18.2% to 17.9%.
Conversely, intra-African imports decreased from 12.8% to 12.1%.
The pattern of low intra-African trade between African countries is observable in Nigeria's foreign trade statistics.
Nigeria’s trade relations with countries from Europe, Asia and America outweigh countries within the continent of Africa.
In the last five years, Nigeria's total imports from countries in Asia, Europe, and America exceeded those from African countries.
Over the same period, Nigeria's total exports to African regions remain low compared to its exports to Europe and Asia.
This trend in Nigeria and other African countries may jeopardise the objectives of AfCFTA.
The AfCFTA agreement requires participating countries to eliminate tariffs on 90% of goods to tackle various trade barriers and gradually promote trade in services within the continent.
When effectively implemented, the AfCFTA will increase the production of goods and services for export and investments in regional infrastructure.
Moreover, it is envisaged that countries will achieve progress in other areas of regional integration, such as macroeconomic policy, production, and the free movement of people.
Despite the potential opportunities of the AfCFTA, intra-African trade remains inconsequential compared to trade with the rest of the world.
A survey conducted by Statista between March and June 2022 reported that most CEOs in Africa said that the lack of access to information on market opportunities, insecurity and political upheaval, unfair competition and the role of subsidies were the main issues preventing export trade within the region.
Concerted efforts from stakeholders from the participating countries in the AfCFTA, investors, and business owners are crucial to addressing the constraints of robust trade relations within the continent.
Will Russia’s Petroleum Ban Affect Nigeria?
A recent announcement by the Russian Government revealed its plan to ban petroleum exports for six months, effective from March 1, 2024, through August 31, 2024.
This decision is part of the efforts of the Russian government to stabilise domestic supply, especially as the country has faced fuel shortages since last summer due to high demand and maintenance of refineries, the Punch reported.
Consequently, the ban has raised concerns among stakeholders about possible effects on Nigeria's petroleum market and other African countries that depend on Russia for petroleum products.
Also, African countries like Nigeria, Tunisia, Morocco, Libya, and Egypt import refined petroleum products from Russia.
Nigeria is a petroleum-importing country that imports refined petroleum products from several countries worldwide.
In 2021, Nigeria imported refined oil from the Netherlands, Belgium, Russia, Norway, India, and China, among others.
Nigeria’s fuel imports from Russia stand at US$1.42 billion, making it the third-largest country Nigeria imported from in 2021.
Based on this analysis, Russia is a major fuel supplier to Nigeria, and the ban on petrol exports may alter Nigeria’s share of fuel imports.
To mitigate the potential risks arising from this development, Nigeria can explore alternative markets to make up for its imports from Russia.
Additionally, the Nigerian government should focus more on enhancing Nigeria's fuel refinery capacity to reduce its overdependence on other nations for refined petroleum products.
BUA Cement’s 5th
BUA Cement has recently constructed a new cement plant in Nigeria, its 5th plant in the country.
The Managing Director of BUA, Yusuf Binji, said the newly constructed cement plant would increase daily cement production, aid product availability, and lower market prices, Premium Times reported.
The Nigerian cement sector is led by Dangote Cement, with a production capacity of 48.6 million metric tonnes and a 60% market share.
BUA Cement has the second-largest production capacity after Dangote, with an annual production of 11 million metric tonnes and a 20.4% market share.
The third largest cement company is Lafarge Africa (WAPCO).
BUA Cement's total revenue increased by 27% from 361 billion in 2022 to N460 billion in 2023.
In Nigeria, cement has been crucial for the development of the country’s infrastructure, housing, and commercial construction.
This expansion in cement production is expected to create employment opportunities in both direct and indirect sectors, contributing to the growth of the country’s economy.
Thanks for reading this edition of Marina and Maitama. This edition was composed by Funmilayo Babatunde.