By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The Central Bank of Nigeria (CBN) on Friday listed the names of 2,442 Bureaux De Changes (BDCs) that met its N35 million new operating capital requirement according to a new circular posted on the Apex Bank’s website.
By this development, it means 766 out of the 3,208 registered BDCs by the CBN have lost their licences for not complying with the July 31, 2014 recapitalisation deadline issued by the Nigeria’s Central Bank.
The CBN had on June 23rd this year released new capitalisation guidelines for operators of Bureaux De Changes in Nigeria.
The CBN had in the guidelines, increased the capital base for BDCs 250 percent (250%) from N10 million to N35 million, and requested they make a caution deposit of N35 million from $10,000.
Kevin Amugo, the director, financial policy and regulation of Nigeria’s Central Bank in a circular dated July 7, 2014 said BDCs that failed to meet the new requirements by July 31, 2014 would lose their licences.
He also said that all the BDCs that met the requirement would be engaged as agents by licensed international money transfer operators for inbound and outbound money transfer business in Nigeria.
The CBN had said that it has applications from 1,417 prospective Bureaus De Changes awaiting its approval.
According to the Nigeria’s Central Bank, if they had granted those licences, Nigeria would have 4,625 licensed BDCs operating in the country to which the CBN must sell $50,000 on a weekly basis amounting to funding their operations with $12 billion per annum; which would provide an avenue for the depletion of the nation’s foreign reserves.
Godwin Emefiele, the governor of the CBN, had said the implementation of the guidelines would help to check the depletion of the country’s foreign reserves from unproductive transactions.
Aminu Gwadabe, the acting national president, Association of Bureau De Change Operators of Nigeria, (ABCON) had argued that dollar sales to the BDCs were not responsible for the depletion of the external reserves affirming that the amount sold to the sub-sector was negligible.
Gwadabe had proposed a 40 weeks recapitalisation timetable to meet the N35 million new minimum capital requirements despite the extended deadline by three (3) weeks to July 31, 2014. ‘’The time is still too short to enable BDCs comply with the statutory and legal requirements of the new policy. The timetable, he said, contains actions needed to be taken to enhance the successful implementation of the CBN policy for the subsector,’’ Gwadabe said.
According to Gwadabe, the timetable starts with sensitisation seminars to educate members on various options to consider in meeting the minimum capital requirement. ‘’We plan to hold these seminars in each geopolitical zone of the federation. Moreover, we would assist members scout for consultants to guide them on issues of valuation of existing companies in order to accommodate new members and or achieve harmonious merger. This is in line with what the CBN did for banks during the recapitalisation exercise of 2004,” he said.
He said that in addition to the 40 week proposed timetable by ABCON, the Association has also appealed to the CBN to take a critical look at the minimum capital requirement of N35 million and the requirement of N35 million as caution deposit, because both requirement implies that the Apex Bank has raised the minimum capital base of BDCs to N70 million, since the N35 million caution deposit would not be immediately refunded once it is deposited.
“Consequently, we have appealed to the CBN Governor to allow the minimum capital base to be at N35 million and the caution deposit at N5 million so as to source the caution deposit from the capital base of the company and the balance of N30 million be used as working capital of the BDCs.
“We have also appealed to the CBN to consider paying treasury bills interest rates on caution deposit to the BDCs, and because of volatility of the rate, an annual average rate could be used when crediting the interest due on the caution deposits.
Also, in cognisance of the fact that all BDCs may not be able to either secure merging partners, source for new investors and or raise money internally to meet the capital require, we have recommended that CBN allow BDCs with N10 million capital to continue to exist but may be denied access to the weekly CBN dollar sales. This means they can trade but would not be allowed to buy dollars from CBN,”the ABCON chief said.
