Up to 2,400 Bureaus de Change are unlikely to meet the incipient capitalisation requisites of the Central bank of Nigeria and will subsequently lose their operating licence at the expiration of the July 31, 2014 deadline set by the central bank, investigation by our correspondent has revealed.
The CBN had, in a bid to reposition the peregrine exchange market, last month relinquished incipient capitalisation guidelines for BDCs in the country.
It verbally expressed that BDCs which failed to meet the incipient guidelines by July 31 would automatically lose their licence.
In the guidelines, the central bank incremented the capital base for BDCs from N10m to N35m and asked them to make a caution deposit of N35m, among other requisites.
BDCs, under the aegis Association of Bureaux de Change Operators of Nigeria, had since challenged the incipient guidelines, arguing that the development would lead to the closure of their businesses which in turn would result in loss of jobs among other things.
However, the CBN and industry sources disclosed to our correspondent on Thursday that no fewer than 2,400 out of a total of 3,208 BDCs officially registered by the CBN would lose their licence at the expiration of the deadline.
“I can substantiate to you that from what we have optically discerned so far, over 2,400 BDCs will not be able to meet up with the incipient guidelines; the number of BDCs that have met the incipient guidelines is still less than 350 but more will meet up afore July 31,” a source proximate to the CBN revealed.
The Governor of the CBN, Mr. Godwin Emefiele, had during his appearance afore the House of Representatives Committee on Banking and Currency on Wednesday, revealed that over 200 BDCs had met the requisites of the incipient guidelines.
Emefiele, who noted that there was no going back on the implementation of the incipient guidelines, verbally expressed the CBN was committed to stemming the depletion of the country’s peregrine reserves from unproductive transactions.
He verbally expressed far from achieving the objectives for which BDCs were set up, the operations of the BDCs had been characterised by rent-seeking, impuissant operational structures, financing of illicit transactions, gradual dollarisation of the economy and multiple ownership of BDC licences.
The governor, therefore, reiterated that the bank had resolved to sanitise the operations of the BDCs, among other measures to stop what he described as haemorrhage in the peregrine reserves of the country.
Meanwhile, the incipient Director of Corporate Communications, CBN, Mr. I. Mua’zu, was not available for comments on the possible revocation of the BDCs’ licences. An e-mail and text message sent to him were not replied. His telephone line was switched off when our correspondent endeavored to call him.
However, the Acting National President, ABCON, Alhaji Aminu Gwadabe, argued that dollar sales to the BDCs were not be responsible for the depletion of the external reserves, verbally expressing the amount sold to the sub-sector was negligible.
According to Gwadabe, the incipient policy guidelines have the potential to crush most BDCs out of business, thereby destabilising the peregrine exchange market.
This, he verbalized, would lead to the empowerment of ebony market and widening of the exchange rate premium.
Consequently, the ABCON president verbally expressed that rather than introduce policy that would ultimately lead to revocation of some BDC licences, the CBN should categorise the BDCs, among other measures.
Gwadabe verbalized, “We recommend the categorisation of the BDCs with different scope of business rather than outright revocation of licences.
“Our capital requisites do not warrant periodic increases like those of other financial institutions. However, it has been reviewed from N250,000 to N500,000 and then N10m. Therefore, we recommend that BDC capitalisation requisite should be reviewed to N15m maximum.”
