The Association of Bureau De Change Operators of Nigeria has warned that about three million Nigerians were at risk of losing their source of livelihood if BDCs closed shop due to their inability to meet the new capital threshold.
This was disclosed by the ABCON president, Aminu Gwadebe, in a chat with The PUNCH over the weekend, in which he also revealed that less than 10 per cent of his members have met the new capital threshold directed by the Central Bank of Nigeria.
In May 2024, the CBN issued new operational guidelines for BDCs, which became effective June 3, 2024, directing all existing BDCs to reapply for a new licence according to their preferred categories (Tier 1 and Tier 2 BDCs) and meet the minimum capital requirement of the licence category applied for within six months from the effective date of the guidelines.
According to the guidelines, BDCs with Tier 1 licences are expected to have a capital base worth N2bn, while Tier 2 licences must have N500m with non-refundable licence fees of N5m and N2m, respectively. In November, ABCON revealed that the Central Bank of Nigeria has extended the deadline for BDCs to recapitalise by six months, meaning the new expiration date would be Tuesday, June 3, 2025.
Speaking ahead of the expiration date, Gwadebe said, “It’s a tough one. It is glaring that many of us will be out of business. As we speak, I’m not sure that up to 10 per cent have completed the capitalisation process. Over three million people may lose their livelihoods as a result of this issue, either directly or indirectly. We are talking about 1,500 entities, with employees and families who will be impacted. It’s a disturbing phenomenon, as many of us will hardly meet the deadline.”
The ABCON president added that players in the sector have been engaging the CBN on the recapitalisation.
“There is an ongoing engagement between the association and the Central Bank. I think the Central Bank did mention that they are looking into our submissions in terms of making it easier for many of us to cross. Two or three weeks ago, there was a meeting between the Abuja stakeholders and the Central Bank. This Monday (today), another stakeholder’s engagement is taking place in Lagos at the CBN Annexe headquarters,” he said.
Gwadebe asserted that the main challenge with meeting the new capital threshold was its prohibitive nature, saying, “The amount required is huge. N500m, N2bn is not a joke. For a retail entity, a bookshop, the Bureau de Change is just like a bookshop. The model being used for us is entirely a bank model.”
He noted that while the model comes with benefits, the lack of assurance that the CBN would enforce them was making the sector unattractive to investors who may be interested.
He explained, “The model comes with some benefits, which they said the Bureau de Exchange is going to benefit from. But, you know, for me, it’s still going to be a very tall order, except if the CBN enforced some of these benefits that they said the BDCs would enjoy. Part of the benefit which they mentioned is that the BDC will be allowed to assess the FM market. Our experience has shown that when the CBN issues circulars to banks to sell to BDCs, banks never comply with those circulars. As we speak, there is a circular that expired May 31st, which was issued around February or March, that banks should be selling to BDCs. Virtually, many banks have not complied with the circular of the Central Bank, and the central bank has not enforced it.
“So, there is a need to look at it critically; either the Bureau de Change can assess directly, not through the banks, or the Central Bank assesses the interbank market and allocates to the BDC directly. That’s the only way I think it can work efficiently and effectively. If not, you cannot tell an investor to come and put in N500m or N2bn, and he can’t assess the market due to a lack of enforcement. Other benefits accruing to BDCs who meet the new capital threshold are in the area of diaspora remittances; however, they said that the BDC can only be an agent of inward transactions.
“For me, most of the transactions in Nigeria are outward. We are talking of school fees, we are talking of medical fees, and we are talking of personal home remittances. So, if you are limiting only inward, the impact will not be as when you allow both inward and outward. Most BDCs and other clients are into outward because that’s where the transaction is. So, it should not be a one-way; it should be both inward and outward.”
Gwadebe maintained that BDCs are only complementing the banks in terms of retail transactions and asked the CBN to reconsider the proportion of cash and cards.
“Presently, considering our peculiarities, yes, it’s good to be cashless. However, even in the UK, it’s not cashless. So, for a start, you say that you want to do a 75 per cent card. You know, most Nigerian cards have issues of network and issues of efficiency. We are not saying cards should not be encouraged. But I think cash is still supreme. So, instead of making it 75 per cent card and maybe 25 per cent cash, it should be reversed,” he asserted.
