If you have ever transacted business in foreign currency in Nigeria, you must have noticed that there is a difference between the exchange rate you get at the official market and the rate you get at the black market (parallel market) – which has since been declared illegal market by the government. But why do we have these differences and which market is better for specific situations?
The official rate is the exchange rate approved by the CBN – the Central Bank of Nigeria is the sole regulator of naira and determines the exchange rate. About 4 months ago, the CBN banned the activities of Bureau DE Change operators and ordered banks to take over the buying and selling of foreign currencies in the country. The CBN is selling Forex directly to the banks so they can in turn sell to end users in an attempt to control the price of Forex – having earlier accused the BDC operators of greed and causing the artificial rise of the naira. The price at which the CBN is selling is called the official rate.
To get the official rate, which is much lower than the parallel market rate, you have to go through the licensed commercial banks in the country. It makes sense to buy at the official rate, but if you are selling you might want to consider the parallel market.
The black market or the parallel market on the other hand are BDC operators who used to operate legally before now but the CBN has since withdrawn all there licences. They can be found in shops at every major Nigerian city, they exchange Forex for customers without asking much questions and dont require any paperwork unlike when customers are trading at the official market.
The major difference between the official market and the parallel market in terms of exchange rate is the price and level of paperwork involved. The official market trades dollar for naira around N409/$1 – N415/$1 with much paperwork, the parallel market trades same at around N550/$1 – N560/$1.
Why does the parallel market exists?
you must have noticed there is a premium charge at the parallel market which does not exist at the official market – making exchange rate there much more expensive. The reason why the parallel market exists is the lack of much regulation there. The CBN puts a limit to the amount of Forex each individual can access through the official channels, those willing to pay the surcharge can get as much Forex as they want from the parallel market.
Another reason is that the parallel market offers higher prices for those selling Forex. If you are a blogger or freelancer who earns in dollars it makes more sense for you to sell your money there as you would get a higher price. you get N560/$1 as against the N410/$1 you would typically get at the official window.
Where to sell dollars at black market in Nigeria
You can find Bureau DE Change operators at the business district of every major Nigerian city. If you live in Ilorin, they are located inside Kwara Hotel along Ahmadu Bello Way.
You can simply Google the name of your city with the keyword ‘Bureau De Change’.