“Please Review”: ABCON Sends Message to CBN As BDCs Struggle To Meet New Capital Requirements
- ABCON has raised concerns about the CBN's new capital requirement for Bureau De Change operators
- The association also shared its stance on the CBN directive mandating BDCs to have a minimum capital of as high as N2bn to operate
- In an exclusive chat with Legit.ng, ABCON president described the requirements as too high and challenging for members
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The Association of Bureau De Change Operators of Nigeria (ABCON) has raised concerns over the Central Bank of Nigeria's (CBN) new capital requirement for Bureau De Change (BDC) operators.
Aminu Gwadabe, ABCON president, told Legit.ng that the requirements are unattainable and beyond reach for many of the association's members in the industry.
Source: Getty Images
New CBN capital requirements for BDC operators
Legit.ng had reported in February 2024 that the CBN announced that the minimum capital requirements for BDC operators in Nigeria would be N2 billion for Tier 1 license holders.
The apex bank added that a Tier 2 licence requirement would be N500 million, marking a departure from the previous threshold of N35 million for a general license.
The new directives were contained in the CBN's revised Regulatory and Supervisory Guidelines for Bureau de Change (BDC) Operations in Nigeria, according to the powers conferred to the central bank under Section 56 of the Banks and Other Financial Institutions Act, 2020 (BOFIA).
The CBN noted that the new guidelines were designed to enhance the regulatory framework in line with ongoing reforms in the foreign exchange market.
BDC operators struggle to meet the requirements
While Gwadabe supported the forex market reforms, he said it is difficult for its members to meet the capital requirements.
He said:
“It is sad to note that the new capital financial requirements of the central bank is unattainable and beyond reach for many or all of our members in the industry.
"This stemmed from the stringent consideration of the highest capital requirements in the world for BDCs, lack of clarity of the new regulations,frequently policy monetary policies reversal,geographical trends like high interest rates, inflation, insecurity, weaker local currency.
"Inspired of the credible opportunities for consolidation and corporate governance in the new CBN regulation our level compliance is at its lowest ebb.
He advised the CBN to consider reviewing the policies to reflect global capital requirements to ease compliance, build investor confidence, and sustain exchange rate stability.
"I therefore advise for reasons of economic turbulence, volatility, uncertainty, lower investors confidence should consider review of the policies to reflect Global capital requirements for the ease of our members compliance, building investors confidence, and sustained exchange rate stability.
"It is on records that the partnerships between the apex bank and BDCs sector remained the most potent mechanism for price stability, closing wider gaps, veritable tool for transactions monitoring and demand measures.
"It is therefore necessary to evaluate the unintended consequences of allowing proceeds of money laundering to infiltrate into the sector, loss of investments and professional skills of the existing players, unemployment and adding to the fragile security situation in the country."
Gwadabe emphasised that ABCON is willing to work with the CBN and the association's members to embrace the review of the apex bank regulation without distorting the fabrics of their existence.
He added:
"I also urge the management of the Central bank to continue to embrace the concepts of the 3cs for collaborations, cooperation, and coordination for the benefits of the sub sector in particular and the economy in General."
CBN stops BDC funding
Earlier, Legit.ng reported that the CBN reportedly stopped funding for Bureau de Change Operators.
The move aims to test the CBN's reform template and minimise quick fixes in the FX market.
The CBN is reportedly reviewing significant policies to strengthen the implementation or tweak its reforms.
Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.
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Source: Legit.ng
Dave Ibemere (Senior Business Editor) Dave Ibemere is a senior business editor at Legit.ng. He is a financial journalist with over a decade of experience in print and online media. He also holds a Master's degree from the University of Lagos. He is a member of the African Academy for Open-Source Investigation (AAOSI), the Nigerian Institute of Public Relations and other media think tank groups. He previously worked with The Guardian, BusinessDay, and headed the business desk at Ripples Nigeria. Email: dave.ibemere@corp.legit.ng.
Aminu Gwadabe (President at Association of Bureaux de Change Operators of Nigeria) Alhaji Aminu Gwadabe is the president of the Association of Bureau De Change Operators of Nigeria (ABCON) that represents the interests of licensed Bureau de Change operators in Nigeria. Gwadabe comments on issues relating to the foreign exchange market, currency exchange rates, and economic policies in Nigeria over the years.
