Association of Bureaux De Change Operators of Nigeria (ABCON) has kicked against the amendments to the new requirements for BDC operations, saying it is an indirect attempt to empower few operators in the sub-sector and consequently force many of the BDC operators into liquidation.
Recall last week, the Central Bank of Nigeria (CBN) amended the new requirements for BDC operations announced on June 23rd.
The deadline for compliance was increased to July 31st, while the mandatory caution deposit of N35 million would now attract interest at savings account rate.
President of the Association, Alhaji Aminu Gwadabe said ABCON, appreciates the amendments and also supports meaningful and achievable reforms in the sub-sector, but contended that the amendments are far from the recommendations made by the Association during a meeting the CBN Governor had with its Executive Council on July 1st.
“We recommended that the new minimum capital base be reduced to N15 million, while deadline for
compliance should not be less than one year as it is the tradition of the CBN in the recapitaliation excercise for other regulated enties.
This is because no organisation can meet the statutory requirements for recapitalization, either by raising fresh capital or through mergers/acquisition, within the period stipulated as deadline by the CBN for BDCs to meet the new minimum capital requirements. By asking BDCs to recapitalize within one month, the CBN is probably asking them to disregard these statutory requirements, and hence commit illegality.
We also recommended that the mandatory caution deposit should be eliminated as there is no justification for such deposit. BDCs are not deposit taking organisations, we operate on cash and carry basis. We pay for CBN dollars two days in advance. So there is no need for such deposits,” Gwadabe said.
He said that ABCON also rejects the decision of the apex bank to limit the weekly dollar sale to BDCs that meet the new requirements by July 31st, saying it will bring back the activities of black market and incidence of fake currency in circulation,which the BDCs were able to abolish as a result of their involvement as monetary tool of the CBN in 2006 during the tenure of the former CBN Governor.
The policy will give the banks the opportunity to hijack the weekly dollar sales to BDCs. Before CBN started selling dollars to BDCs in 2006, banks were not interested in BDC business.
But as soon as the dollar sale started, they saw it as an avenue to make cheap profit, and pressurized the CBN to categorized the sub-sector into Class “A” and Class “B” BDCs.
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Reporting by Babatunde Akinsola in Lagos, Nigeria.
