Aduragbemi Omiyale
By Aduragbemi Omiyale
The Association of Bureaux De Change Operators of Nigeria (ABCON) has described the new regulatory guidelines of the Central Bank of Nigeria (CBN) that pegged the minimum capital base for tier-1 BDC operators at N2 billion and N500 million for tier-2 licence as unreasonable because it is far above global best practices.
The president of the group, Mr Aminu Gwadabe, at an emergency of the organisation in Lagos, said the new policy is discriminatory, kicking against it.
Recall that last week, the apex bank directed forex traders to reapply for operational licences as part of its efforts to sanitize the foreign exchange (FX) market, noting that operators must meet the minimum capital requirements for the license category applied within six months from the effective date of the guidelines, which is June 3, 2024.
But ABCON at the meeting asked the central bank to “allow the existing owners of both the eligible BDCs and revoked BDCs to recapitalise instead of reapplying for a 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.
“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,” Mr Gwadabe stated.
He argued that the six months compliance timeline is not sufficient to raise such funds but suggested two years as the apex bank did with financial institutions currently undergoing recapitalisation.
“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 a two-year timeline. Such timeline should also be granted to BDCs,” he stated, warning that 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.
“Existing BDCs to be allowed to use their generic names as against registration of new names at the Corporate Affairs Commission (CAC).
“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.
