Monday, 8 Nov 2010

The Association of Bureaux De Change Operators of Nigeria has said that the withdrawal of Class ‘A’ Bureau de Change licences will eliminate monopoly in the foreign exchange market.

In a statement by the association on Friday, the President, ABCON, Dr. Emmanuel Balogun, said that the decision was a strong signal to all BDCs that the apex bank would not condone abuses or non- compliance with regulatory requirements.

He added that the directive was particularly instructive to BDCs that wanted to continue in business, especially as regards accessing foreign exchange through the CBN.

The CBN on Tuesday abolished Class “A” BDCs, by withdrawing existing licences effective November 8. This effectively brings an end to the categorisation of the BDC business, which was introduced last year.

The apex bank said in a statement, “The Central Bank of Nigeria has decided to withdraw the licences of all existing Class ‘A’ Bureau de Changes, with effect from November 8, 2010. The withdrawal is part of measures to stem the gross abuses of the enhanced Class ‘A’ BDC, in line with CBN’s avowed commitment to eradicate money laundering.”

Balogun said the observations by the CBN, which led to the decision, confirmed the position of the association that categorising BDCs would not add any value to the industry, but would rather give room for abuses and create a class of “middlemen”.

He said it would also lead to the emergence of monopolistic practices in the industry, which would impede access to foreign exchange in the economy.

He added that the abolition of class “A” BDCs would eliminate “the middlemen” and the monopolist power enjoyed by these BDCs and would also create a level playing field in the BDC subsector.

He said, “This will in turn facilitate the objective of a stable exchange rate, as all BDCs will now have to compete by offering attractive exchange rates to end users. The class ‘A’ BDCs had used the huge volume of foreign exchange they purchased from the CBN to compete against traditional BDCs and dominate the market, especially in terms of exchange rate offered to end users.

“ABCON, being the umbrella body of the industry, however, welcomes erstwhile class ‘A’ BDCs converting to class ‘B‘.

The membership of the association has always been open to all BDCs, even during the era of categorisation. Immediately they comply with the licence requirements of the CBN and membership requirements of ABCON, all the priviledges and rights of membership will be extended to them while they would be expected to fulfill all membership obligation.”

Balogun assured the CBN that that ABCON would continue to support and compliment the efforts of the apex bank to ensure that end-users had easy access to foreign exchange, especially at the retail end.

He said, “The association will continue to vigorously pursue its zero tolerance stance to ensure that all members comply with various regulations, especially regular rendition of returns. The association has commenced measures to boost service delivery in the industry through capacity building.”

Source: Punch