ABCON extols CBN’s N35m mandatory caution fee refund


Kayode Tokede

The Association of Bureaux De Change of Nigeria (ABCON) has welcomed Central Bank of Nigeria (CBN)’s decision to refund N35 million mandatory caution fee  to its

The president of association, Alhaji Aminu Gwadabe while speaking with our correspondent during the weekend, said the refund is expected to give operators leverage to operate in the autonomous market.

He expressed satisfaction on CBN’s decision to open the autonomous market this week, a step that is expected to strengthen the Naira against other currencies.

According to him, “The CBN decision to refund N35 million mandatory caution fee is a good development. The funds will give BDCs the financial strength to play in the autonomous market.

“If the CBN can open the autonomous market by this week- as we are all expecting and possible clear policy on foreign exchange, the Naira might appreciate against the dollar,” he explained.

Last week, the  CBN in a circular signed by Director, Financial Policy and Regulation Department, Mr. Kevin Amugo, said: “given the recent development in the operations of BDCs in the economy, the CBN has decided as follows: The refund of mandatory caution deposit of N35 million to all BDC operators and the retention of N1 million licensing fee.”

The CBN asked all eligible BDCs “to apply for refund of their caution deposits, attaching evidence of payment and bank transfer details.”

CBN Governor, Mr.  Godwin Emefiele had banned the sale of foreign exchange to BDCs and lamented that “it is almost impossible for the CBN to monitor 2786 BDCs with its limited number of examiners”.

He said: “It is almost practically impossible and because of inadequate foreign exchange, the BDCs have to source their foreign exchange autonomously. We do not have the resources to cope with over 2,000 BDCs in the country right now.

“BDCs not happy with this decision are free to return their licence and get a refund of the N35 million cautionary fees besides we need more people to go into other forms of businesses like agriculture where we believe there is a lot of scope at this time.”

Emefiele said that stakeholders in some of the subsectors “have not been helpful in this direction. In particular, we have noted with grave concern that Bureaux De Change (BDC) operators have abandoned the original objective of their establishment, which was to serve retail end users who need $5,000 or less. Instead, they have become wholesale dealers in foreign exchange to the tune of millions of dollars per transaction.

“Thereafter, they use fake documentations like passport numbers, BVNs, boarding passes, and flight tickets to render weekly returns to the CBN.”

He noted that “despite the fact that Nigeria is the only country in the world where the Central Bank sells dollars directly to BDCs, operators in this segment have not reciprocated the Bank’s gesture to help maintain stability in the market.”

According to him, “whereas the CBN has continued to sell US Dollars at about N197 per dollar to these operators, they have in turn become greedy in their sales to ordinary Nigerians, with selling rates  as high as N250 per dollar.”

The CBN, he said, noted  the following unintended outcomes: Avalanche of rent-seeking operators only interested in widening margins and profits from the foreign exchange market, regardless of prevailing official and interbank rates; Potential financing of unauthorized transactions with foreign exchange procured from the CBN; Gradual dollarization of the Nigerian economy with attendant adverse consequences on the conduct of monetary policy and subtle subversion of cashless policy initiative; and Prevailing ownership of several BDCs by the same promoters in order to illegally buy foreign currencies multiple times from the CBN. More disturbing to the CBN the governor said was the financial burden being placed on the Bank and the country’s limited foreign exchange.