By Yakubu LAAH InvestAdvocate
Lagos (INVESTADVOCATE)-The Association of Bureaux De Change (BDC) Operators of Nigeria (ABCON) has protested the new licensing requirements affirming it’s an indirect attempt to empower few operators in the sub-sector and consequently force many of them out of the market.
Aminu Gwadabe , president of ABCON said they appreciate the amendments and also supports meaningful and achievable reforms in the sub-sector; but contended that the amendments are far from the recommendations made by the Association during a meeting the CBN Governor had with its Executive Council on July 1st.
“We recommended that deadline for compliance should not be less than one year as it is the tradition of the CBN in the recapitalization exercise for other regulated entities. This is because no organization can meet the statutory requirements for recapitalization, either by raising fresh capital or through mergers/acquisition, within the period stipulated as deadline by the CBN for BDCs to meet the new minimum capital requirements. By asking BDCs to recapitalize within one month, the CBN is probably asking them to disregard these statutory requirements, and hence commit illegality.
‘’We also recommended that the mandatory caution deposit should be eliminated as there is no justification for such deposit. BDCs are not deposit taking organizations, we operate on cash and carry basis. We pay for CBN dollars two days in advance. So there is no need for such deposits,” Gwadabe said.
The ABCON president said the Association also rejects the decision of Nigeria’s Central Bank to limit the weekly dollar sale to BDCs that met the new requirements, ‘’ It will bring back the activities of black market and incidence of fake currency in circulation, which the BDCs were able to eliminate as a result of their involvement as a monetary tool of the CBN in 2006 during the tenure of the former CBN Governor,’’ he said.
According to Gwadabe, the policy will give the banks the opportunity to hijack the weekly dollar sales of BDCs. ‘’Before CBN started selling dollars to BDCs in 2006, banks were not interested in BDC business. But as soon as the dollar sale started, they saw it as an avenue to make cheap profit, and pressurized the CBN to categorize the sub-sector into Class “A” and Class “B” BDCs,’’ the ABCON president affirmed.
He further affirmed that the minimum capital requirement for Class “A” BDCs, mostly owned by banks and money bags, was set at N500 million, and they were allowed to buy $1 million per week, while Class “B” BDCs with N10 million minimum capital requirement, were allowed to buy just $50,000 per week.
‘’That was how the CBN allowed the banks and money bags to hijack the dollar sales to BDCs in 2009. This, we believe is what will happen once the CBN limits dollar sales to BDCs that met the N35 million minimum capital requirement, and mandatory caution deposit. It’s an indirect way of handing over the weekly dollar sales to banks and money bags, which had no interest in BDC business prior to when the CBN started selling dollars to BDC operators,’’ Gwadabe said.
He urged the Nigeria’s Central Bank to review the saving interest rate on caution deposit to reflect market reality as the chunk of deposits to be realized by the CBN would be placed in treasury bills that attracts between 9 to 10 percent per annum presently.
Last week the CBN amended the new requirements for BDC operations and announced and extension of deadline for compliance to July 31, while the mandatory caution deposit of N35 million would now attract interest at savings account rate.
