Economy
CBN’s New Capital Base for BDC Operators Unreasonable—ABCON
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.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange fell by 1.60 per cent on Tuesday, July 28, as investors booked profit from some of the best-performing stocks in the last trading sessions.
Investor sentiment was weak yesterday, after the bourse finished with three price losers and two price gainers.
FrieslandCampina Wamco Nigeria lost N14.80 during the session to sell for N135.00 per unit compared with the previous session’s N149.80 per unit, Central Securities Clearing System (CSCS) Plc slid by N3.72 to sell at N89.91 per share versus N93.63 per share, and MRS Oil Plc declined by 50 Kobo to N148.00 per unit from N148.50 per unit.
On the flip side, Okitipupa Plc appreciated by N9.57 to quote at N257.57 per share versus Monday’s price of N248.00 per share, and Afriland Properties Plc grew by 89 Kobo to N19.90 per unit from N19.01 per unit.
At the close of business, the market capitalisation of the trading platform went down by N41.69 billion to N2.564 trillion from N2.606 trillion, and the NASD Security Index (NSI) dipped by 69.45 points to 4,273.15 points from 4,342.60 points.
Yesterday, the volume of securities traded by investors surged by 1,000.7 per cent to 6.7 million units from 604,565 units, the value of securities soared by 337.3 per cent to N85.8 million from the preceding session’s N19.6 million, and the number of deals rose by 54.6 per cent to 51 deals from 33 deals.
On a year-to-date basis, Great Nigeria Insurance (GNI) Plc ended the day as the most traded stock by value, with a turnover of 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 75.9 million units exchanged for N5.4 billion.
GNI Plc was also the traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units traded for N415.7 million.
By Adedapo Adesanya
The Naira slid against the US Dollar by N3.32 or 0.24 per cent in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Tuesday, July 28, to exchange at N1,365.53/$1 compared with the previous day’s N1,362.21/$1.
Equally, the local currency went south against the Pound Sterling in the official market yesterday by N2.38 to close at N1,816.43/£1 versus Monday’s closing price of N1,814.05/£1, and against the Euro, it depleted by N2.69 to trade at N1,552.88/€1, in contrast to the preceding session’s N1,550.19/€1.
However, the Nigerian Naira appreciated against the United States Dollar at the GTbank FX desk by N2 during the session to sell for N1,370/$1 compared with the preceding day’s N1,372/$1, and at the parallel market, it remained unchanged at N1,400/$1.
The country’s external reserves declined after the FX injections by the Central Bank of Nigeria (CBN) at the currency market last week.
Interbank FX turnover rose sharply on the day to $102.954 million on Tuesday, reflecting a 160 per cent surge from $39.587 million recorded during the previous trading session.
Driving the huge US Dollar volume turnover on Tuesday, the apex bank reported that the number of FX deals at the interbank market advanced to 121 from 55.
In the cryptocurrency market, coins were largely insulated despite recent tech stock routs, which suggests its tight correlation with AI-linked equities may be weakening, even as regulatory uncertainty and upcoming Federal Reserve and economic data loom over markets.
There is uncertainty about the US Federal Reserve rate decision due on Wednesday, as most observers expect the bank to keep rates unchanged, while some expect a hike in borrowing costs.
Cardano (ADA) appreciated by 4.5 per cent to $0.1639, Ripple (XRP) grew by 2.6 per cent to $1.08, Ethereum (ETH) rose by 1.7 per cent to $1,917.05, Bitcoin (BTC) got a 1.4 per cent lift to sell at $64,374.04, and Binance Coin (BNB) expanded by 0.9 per cent to $570.27.
Further, Solana (SOL) improved by 0.8 per cent to $73.93, Dogecoin (DOGE) climbed higher by 0.6 per cent to $0.0707, and TRON (TRX) advanced by 0.3 per cent to $0.3255, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 apiece.
By Dipo Olowookere
Renewed buying pressure revived the Nigerian Exchange (NGX) Limited by 0.50 per cent on Tuesday, reversing the previous day’s loss.
Interest in Nigerian equities slightly rose during the trading day, with the volume of transactions up by 6.10 per cent to 676.9 million units from the preceding session’s 638.0 million units.
However, the value of trades slumped by 36.36 per cent to N36.4 billion from N57.2 billion, and the number of deals decreased by 22.22 per cent to 55,412 deals from Monday’s 71,240 deals.
Access Holdings led the activity chart yesterday, with a turnover of 87.5 million shares worth N2.4 billion. FCMB traded 68.7 million stocks valued at N810.6 million, Chams sold 31.0 million equities for N148.8 million, United Capital transacted 29.7 million shares valued at N537.5 million, and Zenith Bank traded 26.5 million stocks worth N3.4 billion.
On Tuesday, there were 36 price gainers and 23 price losers, indicating a positive market breadth index and strong investor sentiment.
Lasaco Assurance led the advancers’ chart after it chalked up 10.00 per cent to trade at N2.20, Linkage Assurance appreciated by 9.93 per cent to N1.66, Trans-Nationwide Express also gained 9.93 per cent to quote at N3.10, Sunu Assurances rose by 9.88 per cent to N3.56, and CMFC grew by 9.86 per cent to N3.79.
The laggards’ group was led by Meyer, which shrank by 9.97 per cent to N16.70. Mecure slipped by 9.94 per cent to N56.20, ABC Transport crumbled by 9.93 per cent to N6.35, C&I Leasing crashed by 8.66 per cent to N5.80, and Haldane McCall dipped by 8.21 per cent to N3.02.
Business Post reports that the All-Share Index (ASI) went up by 745.81 points to 247,984.55 points from 247,238.74 points, and the market capitalisation increased by N482 billion to N159.993 trillion from N159.511 trillion.
