The Nation Newspaper

Tag: BDC

  • BDCs’ return to forex market

    •We hope the appropriate lessons have been learnt by both CBN and the operators?

    Six months after locking them out of the official window, reprieve may finally be coming the way of Bureau de Change (BDC) operators. At the end of the interactive session between BDC operators and the Central Bank of Nigeria (CBN)on the new foreign exchange regime last week, President, Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, told newsmen that the apex bank has finally accepted to create special window for the BDC operators. The position was confirmed by no less than the CBN governor’s representative at the parley, Anthony Ikem, when he also told newsmen that the apex bank was working out modalities on how to accommodate the BDCs under the new arrangement.

    To the BDC operators, that, no doubt, is something to celebrate. Faced with dramatic decline in the country’s foreign exchange earnings, the uncontrollable surge in demand for foreign exchange by mostly domestic importers, and sharp practices by BDCs, the CBN had dramatically swung the hammer on the operators on January 11. Specifically, the BDC operators were accused of abandoning the original objective of their establishment which was to serve retail end-users who need $5,000 or less; turning themselves to “wholesale dealers in foreign exchange to the tune of millions of dollars per transaction”; and, finally, of “using fake documentations, like passport.”

    At best, the latest decision by the CBN to resume dollar sales to BDCs can be rationalised on the need to reduce such sharp practices as round-tripping of foreign exchange by closing the gap between the interbank and parallel market exchange rate. And to the extent that the CBN seeks to deepen and liberalise the forex market, the move to align the operations of BDCs with the official forex system would seem inescapable. With the BDCs currently representing the weakest link in the forex management chain, bringing them into the regulatory orbit would seem somewhat inevitable if only to give the apex bank a better handle on the nation’s forex management.

    Is anything on ground to suggest that the objective conditions which necessitated the CBN hammer have changed in any real sense? The answer seems obvious. First, we know that the rate of forex accretion has not improved in any significant sense; most certainly, the demand for forex shows no signs of slowing down. This of course means that the potential for the depletion of the foreign reserves is as real as it was six months ago. Ordinarily, the idea of bringing more forex retailers on board will make sense if there is likelihood of improvement in the forex supply situation. At the moment, the signals are far from reassuring.

    What about the BDC operators? Have they learnt their lessons? Are they ready now to play by the rules, particularly the rules requiring proper documentation of operations? Will they now cease to serve as conduits to the so-called parallel market? What about the capacity issues? Are the BDCs now better placed to render accounts as required by the monetary authorities?

    It is certainly not sufficient for ABCON leaders to offer bland assurances that BDCs would “abide by the criteria as well as comply with all regulatory requirements to justify the renewed confidence in the sub-sector.” After all, we had in the past seen operators sink deeper into the mire after promising to turn a new leaf. This time, such assurances must come with knowledge of the grave consequences for any infraction.

    What about the CBN itself? What has changed in the last six months? Does the CBN now have the men and material to track and report on the activities of more than 2,000 operators? How does it plan to ensure that forex allocations from the official window do not end up in the black market?

    We can only hope that the latest measure is well thought-out, as against pandering to special interests.

  • CBN okays 2,998 BDCs’ licences

    CBN okays 2,998 BDCs’ licences

    The operating licences for 2,998 Bureaux de Change (BDCs) that met the N35 million mandatory capital base have been confirmed by the Central Bank of Nigeria (CBN).

    The number, up by 34 from the previous approval, wass in line with the bank’s plan to deepen the foreign exchange market by getting more BDCs involved in the retail end of the market, ahead of the implementation of its newly introduced flexible exchange rate policy.

    Prior to the confirmation, 2,964 BDCs were operating.

    The data, released by the bank at the weekend, showed that 34 BDCs recapitalised in the last three months, bringing the total number of operators to 2,998.

    The CBN has also refunded nearly the N100 billion mandatory caution deposits to all the BDCs, after it stopped operators from accessing forex from official windows.  Each licenced BDC got N35 million.

    A circular by CBN’s Director, Financial Policy & Regulation, Kelvin Amugo, said the decision followed  developments in the in BDCs’operations in the economy, prompting the apex bank to refund the mandatory caution deposit of N35 million each to all registered BDC operators.

    He however, said the regulator will retain the N1 million licencing fee paid by each of the operators. Amugo urged all eligible BDCs to apply for refund of their caution deposit, attaching evidence of payment and bank transfer details.

    The CBN also spoke of a plan to reopen the banks’ dollar window, shut earlier in the year, for the licenced BDCs.

    Reacting, President, Association of Bureau De Change Operator of Nigeria (ABCON), Aminu Gwadabe described the cash refund as a welcome development.

    He described the development as an indication that the CBN has finally shut its doors to the BDCs. He said since the caution deposit was to enable operators’ access the official forex window, the stoppage of dollar sales to BDCs by the CBN means the fund should be refunded.

  • BDC operators move to resolve crises in ABCON

    BDC operators move to resolve crises in ABCON

    Bureaux De Change  (BDC) operators has started moves to resolve the lingering leadership crisis in the Association of Bureaux De Change Operators of Nigeria (ABCON)

    Rising from a stakeholders meeting of BDCs in the Southwest zone, the operators adopted four resolutions aimed at restoring peace to the association.

    Since last year, some members of the association’s Board of Trustees and the Executive Council have been locked in legal battles which have grounded its operations.

    But last Tuesday, some concerned BDC operators, under the aegis of BDC Stakeholders Committee in the Southwest, convened a stakeholders’meeting of BDCs in the Southwest zone in Lagos.

    Addressing the meeting, Chief executive Officer (CEO), A&S BDC, Mr. Abdul Rasheed Amao, and  a member of the Stakeholders’ Committee,  said the leadership crisis had denied BDC operators of a voice to speak at a time such voice is needed most.

    He said the meeting was convened to allow BDC operators brainstorm on the way out of the leadership crisis.

    BDC operators at the meeting considered four resolutions for adoption. Thereafter, Mrs Mojisola Adesanya of Anchoria BDC, moved the motion, calling the warring members of the Board of Trustees and the Executive Council to withdraw the court case at the Supreme Court and settle amicably.

    The motion was seconded by Mr. Okai Agare of Green House BDC. The second resolution was moved by Prince A. Ajayi  of Double K BD and seconded by  Ndubisi of All Saints BDC.

    The resolution called for an Emergency General meeting of all stake holders nationwide.

    This was followed by another resolution by Benjamin Oje, seconded by Ken Ajurichi of mandating the Stakeholders Committee to develop the agenda of the proposed EGM. The fourth resolution mandated the Stakeholders Committee to  meet with Mr. Bamidele  Adiesa, pioneer chairman Board of incorporatedTrustees ,other members of pioneer Board of Trustee and four members of stakeholders committe to resolve the lingering issue.  The motion for the resolution was moved by  Mr. Osita and Engineer Nze.

  • 2,544 BDCs make CBN list

    2,544 BDCs make CBN list

    The Central Bank of Nigeria (CBN) has given   approval to additional 102 Bureau De Change (BDC) operators, bringing the total to 2,544 since the recapitalisation deadline lapsed in July.

    The CBN had last August, published a list of 2,442 licensed BDC firms, which it said, had complied with its new capital requirements of N35 million as at July 31, last year.

    There were 3,208 registered BDCs before the expiration of the deadline. The CBN had in June announced a new minimum capital requirement of N35 million for the operation of BDCs, up from the N10 million.

    To ensure that the forex dealers comply with the new capital requirements, the CBN had extended the deadline to July 31, last year. The forex dealers were previously given a deadline of July 15, last year.

    The apex bank had also stated that interest would be paid on the mandatory cautionary deposit of N35 million, based on banking industry savings account rate.

    It, among other requirements, also reviewed the mandatory cautionary deposit for BDCs upward to N35 million.

    The regulator had pointed out that on the expiration of the deadline on July 31, last year, that it would cease to fund any BDC that failed to comply with the new requirements, adding that “only BDCs that meet the new requirements would qualify to be engaged as agent by the licenced international money transfer operators for inward and outward transfer business in Nigeria.

    Meanwhile, the Association of Bureaux De Change Operators of Nigeria (ABCON) has said that the $15,000 weekly sale to each BDCs by the CBN is inadequate to cover operating costs.

    “Considering the difficulties that BDCs are facing, due to the volume of the weekly sales granted to BDCs as against the associated costs in the business, we are strongly suggesting that the CBN consider increasing the weekly sales to BDCs from $15,000 to $50,000, the Association said in an appeal letter to the CBN Governor. Making a case for extension of CBN forex intervention to BDCs, the association said,” it said in a statement.

    The association also appealed to the apex bank to reduce the mandatory caution deposit to N15 million from N35 million, to free up cash for BDCs to meet day-to-day operations.

    “After the expiration of the deadline for the payment of the increased caution fee of N35million, we noticed that a good number of Bureau de Change Operators could no longer conveniently carry out their weekly trading due to lack of cash.

    “To avoid the possibility of such BDCs closing shop even after having made the effort to pay their caution fees, we are sincerely pleading that the Central Bank should consider the possibility of reviewing the caution fee from N35million to N15million to financially empower the BDCs to carry on their weekly trading,” it said.

  • Recapitalisation:1000 BDCs may emerge

    BureauX De Change (BDCs)  are waiting for the Central Bank of Nigeria (CBN) to release the list of operators that met the July 31 recapitalisation deadline, Managing Director, Blue Wall Bureau De Change (BDC) Limited Lucky Aiyedatiwa has said.

    He told The Nation that feelers indicated that about 1,000 operators may make emerge.

    Aiyedatiwa, who is former Association of Bureau De Change Operators of Nigeria (ABCON) president, said: “We are waiting. The collation process is ongoing. I think that the CBN may complete the collation before the week runs out.”

    He said operators that hitherto ran four or more BDCs would be forced to go for only one licence because of the new huge capital base. Duplication of ownership, he said, would no longer be feasible.

    ABCON President Alhaji Aminu Gwadabe said the policy was an indirect attempt to empower few operators and force many others out of business.

    ABCON proposed a 40-week timetable for operators to meet the new minimum capital requirements. The proposal, he said, was sent to CBN for consideration. He said though CBN extended the deadline to July 31, the time was still too short to enable BDCs comply with the statutory and legal requirements of the new policy.

    The timetable, he said, contained actions needed to be taken to enhance the successful implementation of the policy for the subsector.

    Managing Director, Kayewd Bureau De Change (BDC) Limited, Rotimi Dada said the CBN was still selling only $15,000 to BDCs as against $50,000 before the policy was announced.

    Dada  said CBN was “a bit hasty” by cutting the dollar sales to BDCs, adding that the regulator should consult with stakeholders on what to be done. CBN, he said, should see the BDCs as macroeconomic factors that favour the economy.

  • Will BDCs beat recapitalisation deadline?

    Will BDCs beat recapitalisation deadline?

    The deadline for Bureaux De Change (BDCs) to raise their capital from N10 million to N35 million expires tomorrow. The Central Bank of Nigeria (CBN) is insisting on the BDCs’ compliance. Will they scale the hurdle? COLLINS NWEZE reports.

    All his efforts came to nought after hours of trying to get the Central Bank of Nigeria (CBN) leadership to change its stand in the recapitalisation of Bureaux De Change (BDCs)

    President, Association of Bureau De Change of Nigeria (ABCON) Alhaji Aminu Gwadabe spent over two hours with CBN Governor Godwin Emefiele trying to convince him on how vital BDCs are to the economy.

    He told the CBN boss that allegations that BDC operators are involved in money laundering and terrorism financing were not correct. He urged the CBN to rescind the June 23 guidelines on the raising of the capital base of BDCs from N10 million to N35 million, a caution fee of N35 million and another N1 million registration fee, bringing the total cost of operations to N71 million. Gwadabe said the recapitalisation policy was an indirect attempt to empower few operators and force many others out of business.

     

    The guidelines

    On June 23, the CBN, among other things, raised the minimum capital requirement of BDCs to N35 million from N10million. It  raised the mandatory caution deposit to N35 million from $10,000.

    Again, on July 7, the apex bank extended the deadline from July 15 to July 31, in response to appeals and intervention of ABCON and both chambers of the National Assembly.

    In a circular, CBN’s Director, Financial Policy and Regulation, Kelvin Amugo, said interest would be paid on the mandatory caution deposit of N35 million, based on the savings account rate. The CBN, Amugo said, would on expiration of the deadline, cease to fund any BDC that failed to comply with the fresh requirements.

    But Gwadabe said the amendments were far from the recommendations made by the association at a meeting with the CBN Governor on July 1.

    “We recommended that deadline for compliance should not be less than one year as it is the tradition of the CBN in the recapitalisation exercise for other regulated entities. This is because no organisation can meet the statutory requirements for recapitalisation, either by raising fresh capital or through mergers/acquisition, within the period stipulated as deadline by the CBN for BDCs to meet the new minimum capital requirements. By asking BDCs to recapitalise within one month, the CBN is probably asking them to disregard these statutory requirements, and hence commit illegality.”

    ABCON, he said, also rejected the CBN decision to limit the weekly dollar sale to BDCs that meet the new requirements by July 31. This, he said, would bring back the activities of black market and fake currency operation, which the BDCs were able to abolish following their emergence as a monetary tool of the CBN in 2006.

    The policy, Gwadabe said, would give banks the opportunity to hijack the weekly dollar sales to BDCs. “Before CBN started selling dollars to BDCs in 2006, banks were not interested in BDC business. But as soon as the dollar sale started, they saw it as an avenue to make cheap profit, and pressurised the CBN to categorise the sub-sector into Class “A” and Class “B” BDCs.

    He said the minimum capital requirement for Class “A” BDCs, mostly owned by banks and money bags,  was set at N500 million, adding that they were allowed to buy $1 million weekly, while Class “B” BDCs  with N10 million minimum capital requirement, were allowed to buy just $50,000 per week. That was how the CBN allowed the banks and money bags to hijack the dollar sales to BDCs in 2009, he added.

    “This, we believe is what will happen once the CBN limits dollar sales to BDCs that meet the N35 million minimum capital requirement, and mandatory caution deposit.  It is an indirect way of handing over the weekly dollar sales to banks and money bags, which had no interest in BDC business until CBN started selling dollars to BDCs.”

    “The savings interest rate on caution deposit should also be reviewed to reflect market reality as the chunk of deposits to be realised by the CBN would be placed in treasury bills that attract between nine and 10 per cent per annum presently,” Gwadabe said.

    He said the CBN regulation should be in line with standard practice. “For instance, during the time of recapitalisation of banks and microfinance banks, a deadline of 102 days were extended to them. I was surprised that only 21 working days were extended to the BDCs. If this is allowed to go, it will be vindictive and will be seen as if the policy was designed to favour a kind of selected few,” he said.

    The ABCON chief said there was the need for categorisation of BDC operators and also promoting constructive engagement with the regulator. He said ABCON has met with the CBN Governor, Godwin Emefiele, to make its position known to him.

    “Some of our recommendations is extension of time. Also, N35 million should be a percentage of funding. During Prof Charles Soludo’s tenure as CBN Governor, he told us to put $200,000 in cautionary deposit, I will give you $1 million weekly. If Godwin Emefiele is saying, give us N35 million caution deposit, we expect the money to be a 20 per cent of the dollar he is going to sale to us,” he said.

     

    Way out

    ABCON has, therefore, proposed a 40-week timetable for operators to meet the new minimum capital requirements. He added that the proposal has been sent to the CBN Governor for consideration.

    He said though the apex bank has extended the deadline by three weeks to July 31st, the time was still too short to enable BDCs comply with the statutory and legal requirements of the new policy. The timetable, he said, contained actions needed to be taken to enhance the successful implementation of the policy for the subsector.

    Gwadabe said: “The timetable starts with sensitisation seminars to educate members on various options to consider in meeting the minimum capital requirement. We plan to hold these seminars in each geopolitical zone of the federation. Moreover, we would assist members scout for consultants to guide them on issues of valuation of existing companies in order to accommodate new members and or achieve harmonious merger. This is in line with what the CBN did for banks during the recapitalisation exercise of 2004”.

    The group has appealed to the CBN to allow the minimum capital base to be N35 million and the caution deposit N5 million so as to source the caution deposit from the capital base of the company and the balance of N30 million be used as working capital of the BDCs.

     

    Dollar sales to BDCs slashed

    The CBN has cut dollar sales to BDCs by 70 per cent from $50,000 per week to $15,000. This is coming ahead of tomorrow’s deadline for operators to comply with new requirements for their operation.

    The N35 million caution raused from $20,000 represents a 1000 per cent hike among other conditions set by the apex bank in its June 23 guidelines for the subsector.

    Managing Director, Kayewd Bureau De Change (BDC) Limited, Rotimi Dada, who confirmed the new dollar sales to BDCs, said the action has cut down dollar supply to the market, and reduced profit margins for operators while the overhead costs remain the same.

    On the sideline of the ABCON public hearing in Lagos, he said operators had rents to pay, adding that they are not able to meet market demands for the dollar which is bad for the market. He said there is a multiplier effect of the policy, which makes it difficult for operators to buy dollar from commercial banks.

    Dada said the CBN was acting a bit hasty by cutting the dollar sales to BDCs and that the regulator should consult with stakeholders on what needed to be done. He said the CBN should see the BDCs as macroeconomic factors that favour the economy.

     

    Alleged terrorism financing

    BDC operators have denied sponsoring terrorism. Gwadabe said this when he led members of the association to meet the Committees on Finance of both chambers of the National Assembly in Abuja.

    Gwadade urged the National Assembly to intervene in the N35 million capital base for BDCs imposed by the CBN. “Money laundering and terrorism are aspects of specialised relevant agencies. The National Financial Intelligence Unit (NFIU), the police and Customs will checkmate the activities of money launderers and terrorism financiers and bring the culprits to book. It should not be the CBN’s primary concern. Our members too have been trained by the relevant agencies and are helping them understand the consequences and implications of money laundering and terrorism financing,” he said.

     

    Foreign reserves soar

    The foreign reserves have been on the rise since the CBN cut dollar sales to BDCs from $50,000 per week to $15,000.

    CBN said the BDCs’ guidelines were modified to, among others, conserve the foreign reserves. Analyses of the reserves, based on data from the CBN, showed that they have risen by over $1.2 billion since June 24, when the CBN unfolded new requirements for BDCs operations, which also led to cut in dollar sales.

    The reserves which were $37.2 billion on June 24 rose to $38.94 billion on July 24. The rate of accretions to the reserves has been marginal but consistent since the dollar cut.

    The reserves were $37.23 billion, on June 25; $37.26 billion, June 26 and $37.31 billion, June 27. The reserves also rose to $37.54 billion on July 1 and continued the upbeat till current position.

     

    CBN’s position

    The CBN has reiterated that its modifications to the guidelines on the regulation of BDCs are aimed at conserving the country’s foreign reserves, among other objectives.

    Emefiele, who spoke during an interactive session with the House of Representatives Committee on Banking and Currency, explained that modifications had to be made on the guidelines following observations that the operations of BDCs in the country had deviated from the objectives for which they were lisensed in the first place.

    He observed that many operators were only interested in widening margins and profits from the foreign exchange market, regardless of the prevailing official and interbank rates.

    He said a cross-country survey of BDCS done by the CBN revealed that 93 per cent of them were in breach of the objectives and provisions of the guidelines. He also said many BDCs had no good accounting records, many had no adequate sales document and lacked audit trail.

     

  • BDCs fight CBN over fresh rules

    Bureaux De Change (BDCs) have risen to fight the Central Bank of Nigeria (CBN) over its recapitalisation of their operation.

    The Association of Bureaux De Change Operators of Nigeria (ABCON) said the recapitalisation was an indirect attempt to empower few operators and force many into liquidation.

    Last week, CBN amended the fresh capital requirements for BDCs unveiled on June 23 and extended the deadline to July 31.

    In a circular, Director, Financial Policy and Regulation at CBN Kelvin Amugo said interest would be paid on the mandatory cautionary deposit of N35 million, based on the savings account rate.

    The CBN, Amugo said, would  on expiration of the deadline, cease to fund any BDC that fails to comply with the fresh requirements.

    But ABCON President Alhaji Aminu Gwadabe said the amendments were far from the recommendations made by the association during a meeting with the CBN Governor, Mr Godwin Emefiele on July 1.

    “We recommended that deadline for compliance should not be less than one year as it is the tradition of the CBN in the recapitalisation exercise for other regulated entities. This is because no organisation can meet the statutory requirements for recapitalisation, either by raising fresh capital or through mergers/acquisition, within the period stipulated as deadline by the CBN for BDCs to meet the new minimum capital requirements. By asking BDCs to recapitalise within one month, the CBN is probably asking them to disregard these statutory requirements, and hence commit illegality.

    “We also recommended that the mandatory caution deposit should be eliminated as there is no justification for such deposit. BDCs are not deposit taking organisations, we operate on cash and carry basis. We pay for CBN dollars two days in advance. So there is no need for such deposits,” Gwadabe said.

    ABCON, he said, also rejected the CBN decision to limit the weekly dollar sale to BDCs that meet the new requirements by July 31. This, he said, would bring back the activities of black market and fake currency operation, which the BDCs were  able to abolish following their emergence as monetary tool of the CBN in 2006.

    The policy, Gwadabe said, would give banks opportunity to  hijack the weekly dollar sales to BDCs. “Before CBN started selling dollars to BDCs in 2006, banks were not interested in BDC business. But as soon as the dollar sale started, they saw it as an avenue to make cheap profit, and pressurised the CBN to categorise the sub-sector into Class “A” and Class “B” BDCs.

    He explained that the minimum capital requirement for Class “A” BDCs, mostly owned by banks and money bags,  was set at N500 million, adding that they were allowed to buy $1 million per week, while Class “B” BDCs  with N10 million minimum capital requirement, were allowed to buy just $50,000 per week. That was how the CBN allowed the banks and money bags to hijack the dollar sales to BDCs in 2009, he added.

    “This, we believe is what will happen once the CBN limits dollar sales to BDCs that meet the N35 million minimum capital requirement, and mandatory caution deposit.  It is an indirect way of handing over the weekly dollar sales to banks and money bags, which had no interest in BDC business until CBN started selling dollars to BDCs.”

    “The savings interest rate on caution deposit should also be reviewed to reflect market reality as the chunk of deposits to be realised by the CBN would be placed in treasury bills that attract between nine and 10 per cent per annum presently,” Gwadabe said.

  • CBN slashes dollar sales to BDCs to $15,000 weekly

    CBN slashes dollar sales to BDCs to $15,000 weekly

    The Central Bank of Nigeria (CBN) has cut dollar sales to Bureau De Change (BDCs) by 70 per cent from $50,000 per week to $15,000, The Nation has learnt.

    This is coming ahead of December 31 deadline for BDC operators to comply with new CBN requirements for their operation which meeting the N35 million minimum capital requirement, representing a 250 per cent increase from pervious N10 million.

    The BDCs are also to make a mandatory cautionary deposit of N35 million from previous $20,000 representing a 1000 per cent hike among other conditions set by the apex bank in its June 24 guidelines for the subsector.

    Managing Director Kayewd Bureau De Change (BDC) Limited Rotimi Dada, who confirmed the new dollar sales to BDCs, said the practice has cut down dollar supply to the market, and reduced profit margins for operators while the overhead costs remain the same.

    Speaking on the sideline of the Association of Bureau De Change (ABCON) public hearing in Lagos, he said operators have rent to pay. He said operators are not able to meet market demands for the dollar which is bad for the market. He said there is a multiplier effect of the policy, which makes it difficult for operators to buy dollar from commercial banks.

    Dada said the CBN is acting a bit hasty by cutting the dollar sales  to BDCs adding that the regulator should consult with stakeholders on what needs to be done. He said the CBN should see the operation of BDCs as a macroeconomic factor that favour the economy.

    ABCON Acting President Alhaji Aminu Gwadabe said the CBN regulation should be in line with standard practice. “For instance, during the time of recapitalisation of banks and microfinance banks, deadline of 102 days were extended to them. I was surprised that only 21 working days were extended to the BDCs. If this is allowed to go, it will be vindictive and will be seen as if the policy was designed to favour a kind of selected few,” he said.

    The ABCON chief said there is need for categorisation of BDC operators and also promote constructive engagement with the regulator. He said ABCON has met with the CBN Governor, Godwin Emefiele to make its position known to him.

    “Some of our recommendations is extension of time. Also, N35 million should be a percentage of funding. During Prof Charles Soludo’s tenure as CBN Governor, he told us to put $200,000 in cautionary deposit, I will give you $1 million weekly. If Godwin Emefiele is saying, give us N35 million caution deposit, we expect the money to be a 20 per cent of the dollar he is going to sale to us,” he said.

    BDCs all over the world is a small shop, Nigerians need to have easy access to their foreign currency requirement, not for them to be seen as a bank. Gwadabe pleaded with the CBN to allow BDCs source dollar somewhere else. “Allow the BDCs to source their dollars either from oil companies or autonomous sources. We can survive without CBN dollars because there are other windows we can source the dollars,” he said adding that BDCs can also survive without dollar sales from CBN.

    The ABCON boss also called for the categorisation of the BDCs with different scope of business rather than outright revocation of licences that some were issued licences since 22 years ago.

     

  • Why trial of erring BDCs is delayed

    When will the 20 bureau de change (BDC) operators accused of money laundering be brought to book? This poser remains unanswered three months after the withdrawal of the BDC licences and the promise of the Central Bank of Nigeria (CBN) to prosecute them.

    The CBN, the Economic and Financial Crimes Commission (EFCC) and the police seem to be passing the buck in the monster.

    CBN Director of Communication Ugochukwu Okoroafor told The Nation that the regulator cannot prosecute the culprits because does not have such powers.

    “The CBN can’t prosecute, but we have done our own job. Contact the police and EFCC. They are the ones to take it from where we stopped,” he said.

    At the EFCC, nothing seemed to have been done also.

    The EFCC spokesman, Mr. Wilson Uwujaren, told The Nation on phone that he would make enquiries before commenting.

    An insider at the Bureau De Change Association of Nigeria, said the affected firms failed to provide detailed reports on how the dollars sourced from the suspended Wholesale Dutch Auction System (WDAS) were utilised.

    The result showed that the 20 affected BDCs failed the returns rendition test, which penalty is a fine, or revocation of licences. The source said the level of abuse was so massive that the CBN decided to revoke their licences to serve as deterrent to others.

    “Given that BDCs were long viewed as a potential source of forex leakage in the system, these measures should boost confidence in the sustainability of the forex band,” the source said.

    The affected BDCs are FBN BDC, Amity Global BDC Ltd, Haruna A. Rahaman BDC Ltd, Majia BDC Ltd, Ahali BDC Ltd, Lawabash BDC Ltd, Bin Dahuud BDC Ltd, Garin Gabas BDC, D & D BDC Ltd and Daytrader BDC Ltd.

    Others are Fatahul BDC Ltd, Global Payments BDC Ltd, Startime BDC Ltd, Planet Ventures BDC Ltd, Fadima BDC Ltd, Optimum BDC Ltd, Secon BDC Ltd, Asabana BDC Ltd, Maiksal BDC Ltd and Alim BDC Ltd.

    It was the result of the inspection made the CBN that WDAS was being grossly abused by BDCs, hence the return to Retail Dutch Auction (RDAS).

    In a statement, ABCON advised BDC operators to comply with the anti-money laundering policy being implemented by the CBN.

    ABCON Acting President, Aminu Gwadabe, said the CBN measures were in line with the group’s position on compliance with regulatory requirements.

    “When it comes to the issue of non-compliance with regulatory requirements, especially rendering returns as well as compliance with approved limits for foreign exchange transactions, the association has a zero-tolerance position. We have made it known to our members that we will not hesitate to impose sanctions, or report to the CBN any member found guilty of not complying with these requirements. So, we are fully in support of the actions of the CBN.”

    He said such action was necessary to ensure sanity in the foreign exchange market, and most importantly the stability of the naira, which is critical to our economy.

    The ABCON chief said most of the 3000 licensed BDCs in the country, conduct their businesses in compliance with the requirements of the CBN, and only a few are exception, noting that the actions of these few ones however, are capable of creating negative impression about the BDC subsector, and also undermine the stability of the naira.

    “Any BDC that is not playing by the rules is a threat to the business of other operators, and also to the foreign exchange market as a whole. Such BDC have become a cancer to the system and they should be treated as such,” he said.

     

  • CBN pegs weekly dollar sales in BDCs at $250,000

    CBN pegs weekly dollar sales in BDCs at $250,000

    Foreign exchange sales to bureaux de change (BDC) operators will remain at $250,000 per week per BDC, the Central Bank of Nigeria (CBN) has said.

    In a circular to authorised dealers and BDC operators, CBN Director, Trade and Exchange, Musa Batari, said the selling rate by the authorised dealers to BDCs shall be the prevailing interbank exchange rate plus a margin not exceeding one per cent.

    He said foreign exchange cash bought by BDCs from authorised dealers and the CBN shall be sold to foreign exchange end-users at a rate not exceeding two per cent margin above the buying rate.

    “For the avoidance of doubt, the margin shall be applicable to all funds to be retailed by BDCs regardless of sources of the fund,” he said.

    Batari explained that authorised dealers shall continue to render weekly returns on sales of BDCs while the BDCs shall render weekly returns on purchase from authorised dealers. He enjoined BDCs to keep adequate records of foreign exchange sale and purchases for purposes of monitoring by authorities.

    The CBN had earlier observed that some authorised dealers have continued to deal in ‘free funds’ without adequate documentation contrary to provisions of extant regulation.

    The regulator reminded the dealers that the circular is still in force and all dealings in foreign exchange must be supported with appropriate documentation and returns rendered to regulatory authorities irrespective of the source of the funds. It said dealers that violate the laws will be sanctioned.

    CBN in September, replaced Wholesale Dutch Auction System (WDAS) with Retail Dutch Auction System (RDAS) because of the ineffectiveness of the former in addressing hitches in the forex market.

    It also withdrew the licences of 20 bureau de change (BDCs) operators for violating forex rules, an indication that more licences withdrawal may be seen in future, should the violation continue.

    Under the RDAS, banks and other authorised dealers place bids on behalf of individual clients who qualify to buy forex at the official auction. The change from WDAS to RDAS allows the authorities to monitor more accurately various sources of forex demand and any potential duplication of forex demand in the system. Banks will remain responsible for all documentation requirements.