ABUJA (Sundiata Post) – Bureaux De Change operators have rejected Central Bank of Nigeria (CBN’s) new regulatory guidelines that pegged minimum capital base at N2 billion for Tier-1 and N500 million for Tier-2 operators.
Rising from an emergency hybrid online and physical meeting held yesterday in Lagos, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, said the capital requirement set by the CBN is huge and far above global best practices.
“The CBN should allow the existing owners of both the eligible BDCs and revoked BDCs to recapitalise instead of reapplying for new licence. The existing N35 million capital requirements should be recognised and be part of recapitalisation. The CBN should embark on nationwide enlightenment to address the fears of the willing investors,” he stated.
It directed that all existing BDCs shall re-apply for a new license according to any of the Tiers or license category of their choice as provided in the guidelines. Also, all operators are to meet the minimum capital requirements for the license category applied for within six months from the effective date of the guidelines.
Gwadabe said: “We observed the minimum financial requirements of N2 billion and N500 million for Tier-1 and Tier-2 BDCs respectively is discriminatory and higher than what is obtainable in other jurisdictions.
In the United Kingdom, the capital base for a BDC is £50,000; Kenya $50,000; India $67,000; Uganda $13,000 among others which are far lower than what has been pegged for Nigeria operators.”
According to Gwadabe, one per cent transaction margin stipulated in the new guidelines for BDCs is not enough to cover operating costs and overhead for the workforce and making profit from the transactions will be very difficult.
He said the six months compliance timeline which commences on June 3, is also not sufficient to raise such funds and therefore called for two-year timeline.
“Even BDC operators with landed properties or other assets for sale to raise the funds, will not be able to accomplish such within the time frame. Other sectors including banks have two years timeline. Such timeline should also be granted to BDCs,” he said.
He said the planned high capital base could chase genuine BDC operators to the parallel market and worsen the exchange rate.
“The CBN should avoid the Algerian example where higher capital pushed BDCs to the parallel market and disrupted the country’s exchange rate system,” he said.
Gwadabe said the timing for compliance should be extended to two years for fairness while grants of indemnity and guarantee to ensure policy consistency.
“Existing BDCs to be allowed to use their generic names as against registration of a new names at the Corporate Affairs Commission. The terms of engagement for mergers and acquisitions should be properly explained to allow for inclusion. The allocation of 75 per cent to cards and 25 per cent cash in forex transactions should be reversed inversely to encourage smooth take-off,” he stated.
