From N35m to N350m: BDCs Urge CBN to Approve Mergers, Increase in Capital Requirement
- BDCs are pushing for mergers in order to strengthen their business model
- They also want the CBN to increase the capital requirement from N35 million naira to N350 million
- This comes as the FX changes introduced by the CBN failed to win back international investors who earlier left the Nigerian market
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The Association of Bureau de Change Operators of Nigeria (ABCON) is trying to get its members to enter into mergers.
According to a document provided by Aminu Gwadabe, the association's president, the move means the minimum capital requirement for dealers to conduct business would rise from the current N35 million to N350 million as contained in a request to the Central Bank of Nigeria (CBN).
According to ABCON, the merger would enable its members handle money transferred by people who live abroad and send dollars to stores and small enterprises better.
Source: UGC
Merger to boost BDCs' capacity
Bloomberg reports that the proposed adjustment is expected to significantly decrease the quantity of money changers operating in the nation.
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It is also expected to shrink their ranks from approximately 5,000 to 500, according to ABCON.
Gwadabe said increased capital requirement would empower the various currency exchange entities to manage greater remittance volumes from Nigerians residing overseas.
The, he added, would facilitate a more substantial allocation of dollars to support the requirements of small and medium-sized enterprises (SMEs).
Devaluation increases pressure on money changers
ABCON's move came as a response to actions taken by Nigeria in June to abolish its system of multiple exchange rates and permit a 40% depreciation of its currency.
Legit.ng earlier reported that the CBN announced changes in the foreign exchange market.
The devaluation has increased pressure on bureau de change operators to consolidate their businesses since they now require more local currency to purchase dollars.
The CBN had granted foreign exchange bureaus permission to buy and sell foreign money to individuals, small firms, and other travellers.
Bureau de change operators have been struggling since the regulator stopped selling dollars to them in 2021 on the pretext that the US money was making its way into the illegal market.
Rates fluctuate as a result of the June currency changes' ongoing failure to fully achieve their goal of luring back international investors that left.
According to data received from the FMDQ, the official trading platform, the naira closed at 758.12/$ in the Investor & Exporter FX window on Wednesday, up from 742.10 on Tuesday.
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In an earlier report by Legit.ng, ABCON asked the CBN to sell forex to its members to improve dollar liquidity in the country.
In a telephone interview with Legit.ng, the association's president said such decision would help ease the pressure on the naira.
He stressed that BDCs could go a long way in helping the CBN monetary policies and efforts to create stability in the forex market.
Source: Legit.ng
