BDCs risk licences over recapitalisation three months to deadline
With three months left before the deadline set for Bureau De Change (BDC) operators to meet new capital requirements, compliance remains elusive as operators cite stringent conditions. This is raising concerns over the retention of their operating licences.
In May 2024, the Central Bank of Nigeria (CBN) released new operational guidelines for BDCs, which became effective on June 3, 2024.
The guidelines require all existing BDCs to reapply for new licences under one of two categories—Tier 1 or Tier 2—and meet the capital requirements for their chosen category within six months.
For Tier 1 BDCs, the minimum capital base is set at N2 billion, while Tier 2 BDCs must have at least N500 million. Additionally, operators must pay non-refundable licence fees of N5 million for Tier 1 and N2 million for Tier 2.
However, three months into the process, there has been no significant movement towards recapitalisation, mergers, or acquisitions within the sector.
“Nobody is ready to pay that amount,” an anonymous BDC operator said.
The source said the BDCs have lodged their complaints to the CBN but the apex bank has ignored them. The conditions do not favour us. “It is too stringent. Going into mergers and acquisitions will not profit anybody,” he said.
Although Aminu Gwadabe, president of the Association of Bureau De Change Operators of Nigeria (ABCON), could not respond as of press time, he said in June 2024 that the CBN has not responded to the association’s inquiry seeking clarity on the implementation of the guidelines.
He said the financial requirements amid policy uncertainty, lack of clarity, and increasing naira depreciation make compliance with the new rules unattainable.
He warned that the stringent new requirements could have severe unintended consequences. “I am worried that the unintended consequences might lead to throwing more formalised operators to the informal sectors.”
In an appeal to the Central Bank, Gwadabe urged reconsidering the new guidelines. “On behalf of our members, we appealed to the management of the apex bank to review and re-evaluate the conditions in the new guidelines to avoid driving existing players into extinction, facilitating money laundering, increasing unemployment, and worsening the fragile insecurity situation in the country.”
The CBN in a statement in March 2024, said in the exercise of the powers conferred on it under the Bank and Other Financial Institutions Act (BOFIA) 2020, Act No. 5, and the Revised Operational Guidelines for Bureaux De Change 2015 (the Guidelines), it has revoked the licences of 4,173 Bureaux De Change Operators.
The statement signed by Sidi Ali, Hakama acting director, corporate communications, reads, “The CBN is revising the regulatory and supervisory guidelines for Bureau de Change operations in Nigeria. Compliance with the new requirements will be mandatory for all stakeholders in the sector when the revised guidelines become effective.”
In the first quarter of 2024, the apex resumed dollar sales to BDCs. On Friday, the CBN increased liquidity in the foreign exchange market by selling U.S. dollars to Bureau De Change (BDC) operators at a rate of N1,580 per dollar.
According to a statement issued by W. J. Kanya, acting director of the Trade & exchange department, each eligible BDC will be allocated $20,000 at the approved rate. In turn, BDCs are authorised to sell to end-users at a margin not exceeding one percent above the purchase rate from the CBN.
