Naira May Slump as Currency Dealers Struggle to Meet CBN’s Recapitalisation Requirement

• Some bureau de change operators have not been able to meet the new N2 billion capital requirement by CBN
• The President of the Association of Bureau de Change Operators of Niger (ABCON), Aminu Gwadabe, said no member has complied yet
• Gwadabe stated that many operators are considering mergers as they are unable to scale the hurdle

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

Despite getting an extension in December, some Bureau de Change operators still struggle to meet the Central Bank of Nigeria (CBN) 's new N2 billion recapitalisation requirement.

Experts have said the development portends danger for the naira, which is already facing renewed volatility in the new year.

CBN’s extends capital requirement for BDCs

Meanwhile, Aminu Gwadabe, President of the Association of Bureau de Change Operators of Nigeria (ABCON), disclosed the operators' challenges.

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In 2024, CBN issued new guidelines for operating the Bureau de Change (BDC) in Nigeria, including two new license categories with different capital bases.

The new CBN rule requires tier-1 BDC operators to have a minimum capital of N2 billion, pay N1 million as a non-refundable application fee, and N5 million as a non-refundable license fee.

CBN disclosed that tier-2 operators would need a minimum capital requirement of N500 million, a non-refundable application fee of N0.25 million, and a non-refundable license fee of N2 million.

According to reports, the apex bank extended the deadline for the operators to recapitalise in December 2024, giving them six months, ending in June this year.

ABCON members struggle to raise capital

However, the ABCON president highlighted the operators' challenges, saying compliance is still low as members struggle to meet up.

He stated that there are no records of any operator meeting up yet.

According to Punch, the ABCON leader disclosed that members are still considering mergers as they engage in strategic sessions to consider available options to scale the recapitalisation hurdle.

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Gwadabe said CBN insisted that the requirements would not be reviewed, stating that engagement with the apex bank is ongoing.

Gwadabe outlines ways for the naira’s appreciation

According to Gwadabe, the appreciation of the naira is based on a robust FX supply.

He said the government based the exchange rate for 2025 at N1,500 for its budget, pointing out that the gap between the official and parallel rates is still vast.

The ABCON chief said CBN needs to inject more FX into the market, citing the recently introduced Electronic Foreign Exchange Matching System (EFEMS) window.

He said the regulator needs to address perception issues, as BDCs are the third level in the forex market.

ABCON praises CBN's new investment account introduction

Gwadabe applauded the introduction of ordinary and investment accounts for Nigerians in the diaspora, saying that remittance is a vital part of BDC FX sources.

Before introducing the new account type, he disclosed that Nigerians in the diaspora operated domiciliary accounts in the country with commercial banks.

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On Friday, January 5, 2025, CBN introduced the Non-Resident Nigerian Ordinary Account and Non-Resident Nigerian Investment Account for Nigerians in the diaspora.

The move aims to allow Nigerians abroad to remit their FX earnings to the country and manage funds in foreign and local currencies while allowing non-resident Nigerians to invest in Nigeria in either foreign or local currency.

CBN engages IMTOs to raise remittance inflows to $1bn

Legit.ng earlier reported that to increase remittance inflows to $1 billion through official channels, the Central Bank of Nigeria (CBN) said it has partnered with top international money transfer operators (IMTOs).

At a press conference in Washington, DC, CBN Governor Olayemi Cardoso discussed the remittance target.

The governor of the CBN and the finance minister, Wale Edun, are leading the Nigerian team to the World Bank and the International Monetary Fund (IMF) annual meetings in the United States (US) this week. They have been meeting with investors, world leaders, and diaspora members.

Source: Legit.ng