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  • Full text of Saraki’s speech during IMF Chief’s visit

    Full text of Saraki’s speech during IMF Chief’s visit

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    ADDRESS BY THE PRESIDENT OF THE SENATE AND CHAIRMAN OF THE NATIONAL ASSEMBLY, HIS EXCELLENCY, SENATOR (DR.) ABUBAKAR BUKOLA SARAKI TO THE MEETING WITH THE PRINCIPAL OFFICERS OF THE NATIONAL ASSEMBLY ON THE VISIT OF MADAME CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND, (IMF) ON 06 JANUARY, 2016.

    Protocol:

    Your Excellency, on behalf of my Distinguished and Honourable colleagues, I warmly welcome you and your entourage to the National Assembly. Your historic visit today, is a testament of the importance you attach to the role of the legislature in the attainment of economic development policies.

    Your Excellency, your visit in this New Year is very auspicious as we begin to deliberate on the 2016 Appropriation Bill as the world economy rebalances in response to falling commodity prices, in particular oil.

    Your Excellency, this National Assembly congratulates you and appreciates the new IMF recognition of the pivotal role parliamentarians could play in forging sustainable development policies for the attainment of the IMF mandate. To me this is critical to minimizing the erroneous perception on IMF policy prescriptions and conditionalities that have been entrenched over the years especially in Africa.

    This, I believe, is vital to the success of the Fund’s policies and programmes not only now but also in the future. As legislators, we play an important role in making our people understand IMF advice, policy trade-offs, consultations and other engagements, so that ownership, transparency and accountability are brought to bear in economic policy choices.

    Since the year 2000 when the IMF/World Bank Group founded the Parliamentary Network which is an independent, non-governmental organisation, participation in the programmes has been on the rise by legislators from all over the World. We commend the initiative. This outreach to legislators is a win-win situation since one of the objectives is to familiarize the legislators with the rationale behind the IMF advisory.

    We recommend that IMF should further strengthen this network as a veritable tool towards greater convergence of understanding and engagement.

    Here at home, the effect of the low oil prices on government revenue is challenging us to think out of the box in funding the repair of infrastructure, boosting employment, and securing our borders and people. These are no mean tasks and we welcome the support of our friends in this trying period.

    Our economic fundamentals remain robust and the economy is resilient to absorb the current oil price shock. The situation is bringing out the entrepreneurship in us. Our private sector is also rising to the challenge. We assure you we will use this occasion to build a new economy diversified away from the perennial effects of oil price shocks.

    The 8th National Assembly will provide the legislative leadership in ensuring a conducive environment for business to thrive.

    The Nigerian legislature strongly believes that having a collaborative working relationship with the Executive Branch of government brings development closer to the people. Since the advent of the new administration, we have worked closely to stabilize the economy and steady the fiscal environment. This, we have indeed demonstrated by the speedy passage of the Medium Term Expenditure Frame Work (MTEF) and recently in the postponement of our recess in order to receive President Muhammadu Buhari to present the 2016 Appropriation Bill. We have also set in motion activities towards reforming our oil and gas industry through legislative initiatives in order to meet international best practices.

    Engaging with our people the issues we strongly made here of FOREX – to do business.
    This is expected – what IMF can do to bridge the gap.
    CBN to advise open – allow Forex
    (ii) No devaluation.
    (iii) Loans to SMEs – bring interest to CBN
    (iv) Technical assistance
    (v) Support policies.

    The 8th Senate Legislative Agenda is of particular interest in Parliamentary Network initiative which brings together parliamentarians and representatives of private sector as well as civil society organisations to discuss how to improve the environment for doing business in the developing world and how countries can increase their ranking in publications such as “Doing Business Report”.

    The purpose of our Legislative Agenda is to enable us focus our lawmaking in areas that will help create jobs, expand our infrastructure base and make our economy work for the benefit and happiness of the majority of our people. Pivotal to the attainment of this overarching objective is the state of the Nigerian business environment. In collaboration with major stakeholders, the 8th Senate is presently signing a memorandum of understanding on “The Enhancing Nigerian Advocacy for Better Business Environment Project,” a National Assembly business and investment round-table initiative, with developmental organizations.

    These roundtables will provide opportunity to the private sector to work closely with the legislature in developing friendly-business environment.

    The initiative will commence with a review of institutional, regulatory and legal instruments currently becoming impediments and bottlenecks to doing business in Nigeria.

    Your Excellency, Distinguished and Honourable colleagues, in closing, I want you to take away these messages:

    Legislature/Executive Collaboration on the Economy:

    The National Assembly is committed to working closely with the Executive arm in addressing the challenges facing the Nigerian economy. This is the position on both sides of the aisle;

    Diversifying and Modernizing Our Economy:
    We will support the Executive with legislation where necessary to give confidence to investors.

    Blocking Revenue Leakages:
    We are assiduously working towards blocking identified legal loopholes on revenue leakages and expanding our tax base;

    Conducive Business Environment:
    We are giving priority to legislation aimed at providing a more conducive business environment in general and reducing the cost of doing business in Nigeria; and

    Ending Impunity and Reducing Corruption: The National Assembly more than ever before, is working at improving its oversight systems to expose corruption wherever it may be, and providing better legal frameworks to entrench the rule of law and end impunity.

    The global economy is currently well interconnected. With our economic weight in our sub-region, a well functioning Nigerian economy provides a strong pillar to its growth. We therefore, implore the international community and financial institutions to partner with us in supporting our economic development aspirations.

    On this note, Your Excellency, we welcome you once again to our beautiful city and wish you the Season’s Greetings.

    Bienvenue!

    PRESIDENT OF THE SENATE

  • CBN cuts BDCs’ dollar sales to $10,000

    CBN cuts BDCs’ dollar sales to $10,000

    The Central Bank of Nigeria (CBN) will on Wednesday sell $10,000 to each of the 2,839 bureaux de change (BDC) operators it approved last week.

    President, Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, who made  this known yesterday, said the CBN took the decision  because demand for dollar is still low as business activities were yet to pick up after the holidays.

    He said the CBN has promised to continue the intervention to bridge the widening gap between the official and parallel market rates, saying the naira still exchanges for between N262 to N265 against the dollar at the parallel market, but exchanges for N199 at the official market.

    Also, the CBN has issued new guidelines for the operation of BDCs which pegged the minimum capital base and cautionary deposits for intending operators  at N70 million.

    The guideline, which is in line with the exercise of the powers conferred on it by the Central Bank of Nigeria Act of 2007 and the Banks and Other Financial Institutions Act 2004 (BOFIA), also stipulates a non-refundable application fee  of N100,000 and  non-refundable licensing fee  of N1 million.

    The circular, which took effect on January 1, orders retail money exchanges to deposit a mandatory cautionary deposit of N35 million in an account with the CBN, in addition to a minimum capital requirement of N35 million.

    The CBN has been struggling to shore up the naira, hit by the plunge in oil prices which started late last year.

    According to the guideline, an intending BDC operator is also to provide non-refundable annual licensing renewal fee of N 250,000 and a non-refundable change of name fee of N100,000.

    The new guideline stipulated that no person shall carry on the business of BDC in Nigeria, except with the prior authorization of the CBN. It also stipulated that a BDC shall be construed as any company that is licenced to carry on small scale foreign exchange business in Nigeria and whose sole object is the carrying on of such business on a stand-alone basis. It said the application for BDC licence shall be processed in two stages, namely: approval-in-principle (AIP) and final licence.

    For the AIP, a formal application to the CBN Governor to grant the promoters an AIP to carry on the business of a BDC in Nigeria is required. Also, a non-refundable application fee of N100,000 or such other amount as may be determined by the Bank from time to time in bank draft payable to the Central Bank of Nigeria.

    “There also should be an evidence of payment of the prescribed minimum capital of N35 million or any other amount as may be determined by the CBN from time to time, into the designated CBN account. The bank shall refund this amount with interest after the proposed institution has obtained its final licence,” it said.

    The guideline, also said that not later than six months after the grant of AIP has been secured, the promoters of a proposed BDC shall submit application for the grant of a final licence to the Governor, with evidence of payment of a non-refundable licencing fee of N1 million only, or any other amount as may be determined by the CBN from time to time among other conditions.

    “There should also be evidence of payment of N35 million mandatory caution deposit, or any other amount as may be determined by the CBN from time to time, into a designated CBN account and evidence of having suitable office accommodation for the operation of the proposed BDC,” it said.

    It stipulates that the qualifications and experiences of the Managing Director/CEO shall be first degree or its equivalent in any discipline with three years post-graduation while the minimum qualifications and experience shall be first degree or its equivalent in any discipline with two years post-graduation experience.

    “One of the Management staff appointed above should be designated as compliance officer for the purpose of ensuring compliance with all regulatory guidelines and circulars,” it said.

    It said any person/individual wishing to sell foreign currency above $10,000 or its equivalent to a BDC shall be required to disclose the source. “The maximum amount per transaction for a BDC shall be determined from time to time by the CBN with respect to business and personal travel allowances. The maximum amount currently for Personal Travel Allowance and Business Travel Allowance (BTA)  per quarter is $4,000 and $5,000,respectively.

  • Naira strengthens against dollar at parallel market

    Naira strengthens against dollar at parallel market

    The naira on Wednesday strengthened against the dollar as currency speculators feared that the apex bank might come up with policies that might be unfavourable to them in 2016.

    The News Agency of Nigeria (NAN) reports that the naira gained N1, an appreciation of 0.4 per cent, to exchange at N226 to the dollar as against its previous value of N227.

    However, at the official inter-bank window, the naira continued to exchange at N197 to the dollar just as available apex bank’s record puts the price of crude oil at 36.09 dollars.

    Traders at the parallel market told NAN that the appreciation was fuelled by currency speculators.

    They envisaged that the apex bank might come up with policies that would affect them negatively in the New Year.

  • CBN explains forex restrictions

    CBN explains forex restrictions

    Foreign currency restrictions will be lifted only when reserves have been built up to an appreciable level, the Central Bank of Nigeria (CBN) has said.

    Addressing journalists in Abuja at the weekend on the recent decision by Deposit Money Banks (DMBs) to limit the use of their debit cards overseas, the CBN’s Director, Monetary Policy Department, Mr. Moses Tule, said the restrictions will be lifted “as soon as we build up reserves; when you see us building reserves to $50 billion, $60 billion, $70 billion, $200 billion or more”.

    Tule added: “The moment we begin to build reserves, we expect that just as this restrictions were not there most of the restrictions will be lifted, but for now every hand needs to be on deck. We need to earn foreign exchange. As a country you can improve your business processes in order to export and earn foreign exchange and that is what the country is calling on patriotic Nigerian businessmen to do.”

    There have been criticism of the restrictions and banks’ decision to limit the use of debit cards overseas.

    Explaining the build-up to the debit card restrictions by the DMBs, Tule said: “The limitation on the use of debit or credit cards outside the country was not a limitation that was placed by the CBN. They were restrictions that Deposit Money Banks (DMBs) placed because they have to settle whatever transactions you make with your debit cards with their corresponding banks in foreign currency and if the banks do not have the foreign currency to do that then you create a liability on them which will crystallise on their balance sheets.”

    The CBN, he said, sympathises with Nigerians who are unable to use their debit cards overseas, but the CBN, Tule said, cannot stop it. His words: “At this point, we are in in this country, the obvious answer is that the CBN cannot stop what the banks are doing now and the reason is very obvious. Our priorities as a nation for the allocation or use of foreign exchange is 1) for the settlement of matured LCs (letters of Credit) that have been opened for importation; 2) for the importation of petroleum products until such a time either when we have our refineries fully operational and we are not in a position to import fuel again to ensure that the wheels of economic development continue turning and running  and 3) for the importation of raw materials.”

    By the time the CBN meets these conditions “given the level of current flow into the reserves, by the time we meet these three priority areas, you will discover that people who are using their debit cards overseas for shopping can never be on the priority list. We would then go back to the point where the foreign exchange, which is a stock dries up that is the position we are in today.”

    The CBN director added: “Whatever decisions banks take with respect to allowing their customers use debit cards overseas, those are strictly business decisions. They are looking at their balance sheets, they are looking at their capacity to settle with their corresponding banks the obligations that will crystallize on their balance sheets, rather than open themselves to the people who are out their shopping in foreign currencies, using their debit cards for one thing or another.”

    The CBN official admitted that they understand that not all the demands will be for shopping, but “we have seen that the reserves are not there and what we have; we have to use essentially for the purposes that will keep the wheels of the economy running”. “We have to produce for export we can’t continue to depend only on the export of crude oil,” he said.

    Tule noted that “the banks have not said customers do not have access to their dollar accounts; what they are saying is that if you deposited cash, you can ask for cash; if the deposits in your account were by way of transfer and you want to carry out a transaction you can only transfer; that is what they are saying.”

    The CBN, he said, frowns at the situation where “you benefited from cheap foreign exchange, bought imported raw materials by using the official channels and you brought in your proceeds, now you want to go and draw cash so that you can sell them in the parallel market, we will not allow you because first you generated the proceeds by accessing the official window, which was more cheaper so we wouldn’t allow you”. “These are some of the reasons behind our saying that we placed those restrictions on even people who had dollar export domiciliary accounts background but they can have access to these accounts if they want to import raw materials and that is what we have stuck to.”

    Shedding more light on the reason for the forex restrictions, Tule said that “the currency of use in this country is the naira, not the dollar; you cannot expect carrying out dollar transactions over the counter in an economy whose currency is not dollar-denominated we must learn to respect our systems and laws that govern our system.”

    The law, he said, clearly states that “your deposits are in naira; if you have a domiciliary account the proceeds, if earned outside the country, you can receive foreign currency deposits into it or if you have earned foreign currency the foreign currency can be deposited in that account. I don’t see you carrying out a transaction and earning foreign currency within Nigeria; you will earn naira. If you had a business that earned foreign currency it will come into your domiciliary account by way of transfer; it is not going to come into your account by way of cash. If you have got cash deposit in your domiciliary account, there are only two ways about it, a) either you’ve patronised the black market or you’re doing some short changing and that’s against the law. The CBN would not like to sit and watch our people using the legitimate channels of the financial system to promote illegality.”

    Asked if the CBN will stop funding bureau de change (BDCs) and if it is considering devaluing the naira, Tule said: “From the policy perspective, very hard choices will have to be made and we will make them for the sake of the country and that is the bottom line of that budget speech delivered by President Muhammadu Buhari, the decisions are not to harm or hurt anybody, the decisions would have to be made but it would not be to the detriment of the generality of Nigerians so we must ensure that we promote the welfare of the average Nigerian.”

    Whatever the nature of the hard decisions that policy makers will take in 2016, the CBN, Tule said would not shut down BDCs because “when you make policy decisions that involve the public you must protect the employment those agencies are generating, whether you like it or not the BDCs the way they’re currently run one way or another generates some level of employment we don’t want to take decisions that will increase the unemployment situation in the country.”

    “It is not as if we are oblivious of some of the things they’re doing we have placed a whole regime of sanctions on erring BDCs in the past, we will continue to fine tune the regulatory mechanism around BDCs, but the button line is that we shouldn’t take decisions that will worsen the situation for policy decisions, you must always be careful when you take them even if you want to take such decisions you must be careful when to take it you must weigh the fundamentals and all the issues round you so we’re looking at the entire regime of BDC operations, the policy regime around it and the regulatory framework; we are fine tuning it and will continue to fine tune it but I definitely assure that we definitely are going to have better BDCs we are beginning to see the example of Travelex that is the way it will go,” Tule said.

  • FG bans use of credit cards abroad

    FG bans use of credit cards abroad

    The Central Bank of Nigeria (CBN) has ordered all commercial banks to stop customers from using their debit and credit cards abroad.

    Due to the latest development, banks are beginning to communicate the apex bank’s directive to customers through emails, noting that it is a “temporary measure”.

    The directive, which takes effect from January 1, 2016, will no doubt affect access to foreign online retailers.

    This is part of Federal Government’s efforts to obstruct the flow of foreign exchange out of the country.

  • CBN to pump $90m into parallel market

    CBN to pump $90m into parallel market

    The Central Bank of Nigeria (CBN) is expected to shut the official foreign exchange (forex) window for the year by Wednesday and pump $90 million into the parallel market, it was learnt yesterday.

    This week’s parallel market intervention is expected to curb prevailing naira volatility in the market. The naira last week exchanged at N280 to a dollar after the CBN supplied only $23 million to Bureaux De Change (BDC) operators, $67 million short of the expected $90 million.

    Association of Bureaux De Change Operators of Nigeria (ABCON) President Aminu Gwadabe, who said he had heard about the plan, said the apex bank will meet this week’s forex demand to avoid a repeat of last week’s crisis.

    “I think the CBN has learnt its lessons and will supply $90 million to the market. This translates to $30,000 for each of the 3,000 BDCs. That is the only way the naira will begin to rebound in the parallel market. It is currently exchanging at N263 to one dollar in Lagos and Abuja,” he said.

    The parallel or black market has been sustained by the significant differences in the naira exchange rates against international currencies. With nearly N70 gap between the official and the parallel market rates, there has been a lot of room for players to make easy profit.

    Though primarily funded by travellers and Nigerians living abroad who remit funds home, many banks have profited illegally by selling forex obtained through official sources to the black market through a process known as round tripping.

    Gwadabe also said the high level of forex volatility recorded in the parallel market last week, was fuelled by the inconclusiveness of the CBN’s plans to permanently stop supplying dollar to the BDCs.

    He disclosed that the market volatility was also worsened by banks recalling loans given to forex speculators as the year gradually runs to an end.

    He attributed the naira rebound to people who kept large volume of dollars, but rushed to take advantage of high prices. It is estimated that about $5 billion are held by people waiting to take advantage of price changes.

    CBN Director, Monetary Policy Department, Moses Tule, said the naira was under pressure because of the actions of speculators.

    He said currency speculators are taking positions on the naira, with a view to making excess gain from currency trading.

    Tule said currency speculators were determined to put severe pressure on the monetary authorities and make the apex bank buckle and further devalue the naira.

    According to him, the CBN would not fold its arms while economic predators feast on the nation’s commonwealth through arbitrage.

    While maintaining that the only rate in the currency market is N196.47 to dollar, he wondered why indigenous operators in the Bureau de Change (BDC) segment of the market chose to make huge profits at the expense of customers in genuine need of the currency.

    Tule lamented that while international operators, such as Travelex, traded at not more than N7 above the rate, indigenous operators preferred to make excessive profits.

    “We know what the fundamentals of the economy are and we will continue to take the right economic decisions on what to do and not when people sitting out there speculating on the currency think the naira should be devalued, so that they could make profit out of it,” he said.

    “No country quotes its exchange rate with reference to the BDCs rates. The currency has a reference rate and that is the interbank exchange rate,” he said.

    Tule urged Nigerians to be more patriotic in their dealings rather than engage in activities capable of undermining the integrity and value of the naira, adding that the media had a role to play in assisting the CBN to curb speculation on the naira.

  • CBN blames naira slide on speculators

    CBN blames naira slide on speculators

    The Director, Monetary Policy Department of the Central Bank of Nigeria (CBN), Mr. Moses Tule has said the naira was under pressure because of  currency speculators.

    According to him, the speculators mounted pressure on the naira with a view to making excess gain from currency trading.

    The naira had on Wednesday, exchanged N270 to a dollar, and may continue to fall as government’s dollar earning decline.

    In a statement from the apex bank, Tule said the currency speculators were determined to put severe pressure on the monetary authorities expecting the CBN to buckle and further devalue the naira.

    The CBN, he said,  had a responsibility for the economy and would not fold its arms and allow economic predators feast on the nation’s commonwealth through arbitrage.

    While maintaining that the only rate in the currency market was N196.47 to a dollar, he wondered why indigenous operators in the Bureau de Change (BDC)chose to make huge profit at the expense of customers in genuine need of the currency.

    He lamented that while international operators such as Travelex traded at not more than N7 above the rate, indigenous operators preferred to make profits as high as N50.

    “We know what the fundamentals of the economy are and we will continue to take the right economic decisions on what to do and not when people sitting out there speculating on the currency think the naira should be devalued so that they could make profit out of it,” he said.

    He added: “No country quotes its exchange rate with reference to the BDCs rates. The currency has a reference rate and that is the interbank exchange rate.”

    Mr. Tule, therefore, urged Nigerians to be more patriotic in their dealings rather than engage in activities capable of undermining the integrity and value of the naira. The media, he added, has a role to play in assisting the CBN to curb speculation on the naira.

    Also speaking, a former Deputy Governor of the CBN, Mr. Tunde Lemo urged Nigerians to change their lifestyles and support the drive towards conserving the nation’s foreign reserve, stressing that no developing economy leaves the exchange rate determination free to market forces.

  • Reps to CBN: disclose interest on foreign reserve accounts

    Reps to CBN: disclose interest on foreign reserve accounts

    The House of Representatives has demanded to know how the nation’s foreign reserves accounts are managed by the Central Bank of Nigeria (CBN).

    The lawmakers, who were particular about the interests accruing to the funds in the foreign reserve accounts, are not happy that the reserves are managed by foreigners.

    The lawmakers directed the CBN to declare, without delay, the particulars of the accounts in which foreign reserves of the federation are held and any interest accruable to the foreign reserve accounts held on behalf of the federation in the last four years and thereafter periodically.

    The lawmakers urged the CBN to report the criteria for engaging any and all foreign managers of the foreign reserves account of the federation to ensure transparency.

    This is in addition to annual reports of performance and continued compliance of the managers with any set guidelines issued by the CBN for the engagement of the managers.

    The decision of the lawmakers followed the adoption of a motion by Abudussamad Dasuki  (APC, Sokoto), who noted that the CBN maintains several foreign reserve accounts on behalf of the federation containing funds in foreign currencies.

    He said the  foreign currencies are held in financial institutions before they are shared during the monthly Federation Accounts Allocation Committee  (FAAC).

    He said: “It is a fact that reasonable interests accrue from the surplus of funds held by the CBN on behalf of the federation which have not been monetised into naira and received by the federation from the CBN from the foreign bank accounts.

    “It is also a fact that foreign managers are contracted by the CBN to manage the funds on contractual terms which are not subject to public scrutiny or open competitive and transparent processes.

    “Furthermore, the Nigeria  Sovereign Investment Authority  (NSIA) was established, among other reasons, to undertake the management of of the excess crude account funds on behalf of the federation and that domestic capacity is being developed in order that large state-owned funds can be managed by Nigerians.

    “It is however of concern that the accruals to the federation from foreign reserve accounts have not been openly declared

    “Of more concern is the fact that some states have persistently agitated for the discontinuance of the ‘agreement’ allowing FAAC to decide savings or reserves from disbursable funds to the components of the Federation.

    “It is worrisome that the entire circumstances regarding the management of the Excess Crude Account  (ECA) of the federation is straining the relationship between the three tiers of government, in particular, with the argument of some states that they require the unused funds for  development purposes and so do not support the continued arrangement.

    “If this situation is not thoroughly examined and appropriate measures taken, it may lead to unforeseeable consequences.”

    The bill was referred to House Committee on Finace which had two  months to report back after it was adopted through voice vote.

  • CBN acquires 62, 021 meters for power firm

    CBN acquires 62, 021 meters for power firm

    The Central Bank of Nigeria (CBN) yesterday in Kano launched the acquisition of 62, 021 meters for distribution to customers of Kano Electricity Distribution Company (KEDCO) as part its N213billion intervention programme in the power sector meant to improve revenue generation.

    The Deputy Head, Infrastructure Finance Office, CBN Development Finance Department, Elder Boma Banebo told reporters that the unveiling of the initiative was designed for CBN Nigeria Electricity Market Stabilisation Facility made to help DisCos to acquire metres for power consumers.

    He said the intervention was part of CBN’s commitment to reach out to stakeholders in finding lasting solution to the epileptic power supply to its numerous customers.

    “The CBN is expected to provide a banking sector led intervention to provide liquidity to settle legacy gas debts and computed revenue shortfalls, which would be utilised for permitted expenditure under certain agreements,” he said.

  • CBN pegs BDCs’ minimum capital, caution deposit at N70m

    CBN pegs BDCs’ minimum capital, caution deposit at N70m

    The Central Bank of Nigeria (CBN) has issued new guidelines for the operation of Bureaux De Change (BDCs). According to the apex bank, the minimum capital base and cautionary deposits for new operators  at N70 million.

    The guideline, which is in line with the exercise of the powers conferred on it by the Central Bank of Nigeria Act of 2007 and the Banks and Other Financial Institutions Act 2004 (BOFIA), also stipulates a non-refundable application fee  of N100,000 and  non-refundable licensing fee  of N1 million.

    Meanwhile, the naira was trading at a new low of 260 to the dollar among most retail money exchange operators on Friday as against 255 on Thursday. On the official interbank market, it traded at 199 at 1227, close to a rate at which it has been pegged since February. The circular, which will come into effect in January, orders retail money exchanges to deposit a mandatory cautionary deposit of N35 million in an account with the CBN, in addition to a minimum capital requirement of N35 million.

    The CBN has been struggling to shore up its naira currency hard hit by the plunge in oil prices, which started late last year. The new guideline is the latest measure which has cramped dollar demand and the banking sector.

    The intending BDC operator is also to provide non-refundable annual licensing renewal fee of N 250,000 and a non-refundable change of name fee of N100,000.

    The new guideline, released at the weekend, said no person shall carry on the business of BDC in Nigeria, except with the prior authorisation of the CBN.

    It also stipulates that a BDC shall be construed as any company that is licensed to carry on small scale foreign exchange business in Nigeria and whose sole object is the carrying on of such business on a stand-alone basis.

    It said the application for BDC licence shall be processed in two stages, namely: approval-in-principle (AIP) and final licence.

    For the AIP, a formal application to the CBN Governor to grant the promoters an AIP to carry on the business of a BDC in Nigeria is required. Also, a non-refundable application fee of N100,000 or such other amount as may be determined by the bank from time to time in bank draft payable to the CBN.

    “There also should be an evidence of payment of the prescribed minimum capital of N35 million or any other amount as may be determined by the CBN from time to time, into the designated CBN account. The bank shall refund this amount with interest after the proposed institution has obtained its final licence,” it said.

    The guideline, also said that not later than six months after the grant of AIP has been secured, the promoters of a proposed BDC shall submit application for the grant of a final licence to the Governor, with evidence of payment of a non-refundable licencing fee of N1 million, only or any other amount as may be determined by the CBN from time to time among other conditions.

    “There should also be evidence of payment of N35 million mandatory caution deposit, or any other amount as may be determined by the CBN from time to time, into a designated CBN account and evidence of having suitable office accommodation for the operation of the proposed BDC,” it said.

    It stipulates that the qualifications and experiences of the Managing Director/CEO shall be first degree or its equivalent in any discipline with three years post-graduation while the minimum qualifications and experience shall be first degree or its equivalent in any discipline with two years post-graduation experience.

    “One of the management staff appointed above should be designated as compliance officer for the purpose of ensuring compliance with all regulatory guidelines and circulars,” it said.

    It said any individual wishing to sell foreign currency above $10,000 or its equivalent to a BDC shall be required to disclose the source. “The maximum amount per transaction for a BDC shall be determined from time to time by the CBN with respect to business and personal travel allowances. The maximum amount for Personal Travel Allowance and Business Travel Allowance (BTA) per quarter is $4,000 and $5,000,’’ it added.