This is how the Bank Verification Number (BVN) is affecting the naira

According to Reuters, the naira fell 1.22 percent against the dollar in the unofficial market. It was quoted at N246 compared to N243 from the previous day. The Bureau de Change (BDC) operators in Nigeria have attributed this crash to the Central Bank of Nigeria’s mandate to acquire the Bank Verification Number (BVN) of all customers attempting to purchase foreign exchange.

Prior to the introduction of the BVN, an international passport, valid visa and travel tickets were the only requirements to purchase foreign currency within the country. The CBN’s extension of the BVN registration has affected the agents who are not backed by the Data Privacy Protection Act and allowed to store customer data, unlike commercial banks.

The president of the Association of Bureaux de Change Operators of Nigeria, Aminu Gwadabe, said “over 1500 BDC agents out of 2818 operators were denied access to participate in the forex sale on Wednesday due to incomplete documentation with the CBN thus, limiting dollar supply.” He further explained that Bureau de Change operators are finding it most difficult to trade especially with customers who are unwilling to share their BVN details with them.

Since the implementation of the policy, which mandated all BDC operators to take the BVN details of customers buying foreign exchange on the 1st of November, the amount of dollars sold within the country has reduced greatly, thus, creating a scarcity of the currency in the market. Most foreign exchange users have resorted to using black market operations to sort out their foreign exchange needs.

The National Assembly urged the CBN to setup a less demanding operational structure for foreign exchange transactions since this policy has affected the Bureau de Change business and caused the subsequent crash of the naira in the unofficial market.

The CBN, however, has defended the adoption of the BVN as a condition for purchase in order to reduce the incidence of multiple purchases, forex leakages and the illicit transfer of funds based on genuine demand. But this extension to sub-sectors such as the Bureaux de Change, appears to have caused more problems.

Despite the CBN’s effort to regulate the cash flow in the interbank market, its mandatory use of BVN by BDC agents has continually led to the free fall of the naira.

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