The President of the Association of Bureau De Change Operators of Nigeria (ABCON), Mr. Aminu Gwadabe has stated that the increase in capital requirements for BDCs from N35 million to N2 billion for Tier-1 BDCs is against international best practices.
He disclosed this during a panel session at an economic discourse organised by Vanguard Newspapers in Lagos where he criticised the negative label given to BDCs are financiers of terrorism and the illicit flow of money.
He explained that the weakening of the naira is caused by the unearned income pursuing the naira and not due to demand for the dollar noting that BDCs were not responsible for the depreciation of the naira but corruption.
He stated thus, “the Bureau De Change sector has seen serious policy inhibitors. In 2014, just an exchange not a deposit bank, they increased the capital from N10 million to N35 million and now we are doing the same thing, even microfinance that is a bank, their capital base is N200 million and now we are raising the capital base of BDCs from N35 million to N500 million.- that is for Tier-2, Tier-1 is N2 billion. It is highly against global standards.”
“Even in the U.K, the capital requirements for BDCs is £50,000 that is like N100 million. In Uganda, capitalisation of BDCs is $13,000, in India it is $67,000. So, it is good regulators look at standards”
Also, Mr Gwadabe called on the Central Bank to review the N2 billion capital requirement for BDCs to fit into international standards and noted that ABCON members were open to collaboration with the apex banks on some of these policies.
He noted that some of the policies of the government aimed at tackling were not feasible noting that the exchange rate affects everything including migration and educational tourism.
Backstory
The Central Bank of Nigeria (CBN) in its recently reviewed guidelines for BDCs in the country increased the capital base of Tier-1 BDCs from N35 million to N2 billion- an increase of 5,614% while that of Tier-2 BDCs was increased to N500,000 million.
The bank asked BDCs to meet the new capital requirement within the next six months. It stated, “All existing BDCs shall: Re-apply for a new license according to any of the Tiers or license category of their choice as provided in the Guidelines.”
“Meet the minimum capital requirements for the license category applied for within six (6) months from the effective date of the Guidelines.”
In February, the CBN released a draft guideline for the proposed regulation of Bureau De Change (BDC) operations nationwide, aimed at sanitizing the sector.
