Stories by Amaka Ifeakandu
Bureau De Change (BDC) operators have called for extension of deadline for compliance to the Central Bank of Nigeria (CBN) new requirement, saying that three weeks is not enough for them to raise mandatory cautionary deposit to N35 million.
They pointed out that the failure to extend the recapitalization time frame would not only lead to the closure of many BDCs and loss of jobs but it will create more room for tout to operate in the industry.
The argued further that as non-quoted companies, they cannot access the capital market for funds, noting that that the only way BDCs as privately owned company could raise capital is through private placement of shares to an individual or group of individuals and it takes more than a month for any firm to secure fund raising approval from capital market regulator.
“BDC does not require huge capital because they don’t give loans to people. Only what they needed is training and close monitoring to ensure that the foreign exchange sold to them are used judiciously,” one of the operators said
The apex bank while reviewing BDCs guidelines last week raised the mandatory cautionary deposit to N35 million, adding that such money shall be deposited in a non interest yielding account in the CBN upon the grant of Approval -in Principle.
It also reviewed upward the minimum capital requirement for the operation of the Bureaux De Change (BDCs) from N10 million to N35 million. The CBN saidthat all existing BDCs and those currently operating with the final approval letter are required to comply with the requirement on mandatory cautionary deposit by July 15, 2014 while all current applications are expected to comply with the new requirements.
However, an analyst at Afrinvest Securities Limited in a report stated that the ability of the CBN to follow through with the policy would be tested with the policy.
It noted that the weekly sales limit of $250,000 earlier imposed on BDC operators in January this year by the CBN was later suspended amidst significant demand-supply mismatch within the BDC segment. This, according to a report by the research and investment firm then broadened the spread between Interbank and BDC rates to N13 levels in January.
“Following the repeal of the dollar supply limit to the BDCs, nonetheless, the gap between the interbank and BDC market eased to N3.90 in June and remains at benign levels currently.
“In view of the deadline for the compliance of the policy slated for 15th July, 2014, we anticipate further widening between the ‘street rate’ and interbank rate,” the report added.
In order to support exchange rate, it suggested that the central bank’s cashless policy should be extended to the Naira/dollar Forexmarket to check leakages of foreign exchange to unauthorized dealers and reduce the level of artificial demand in the sector.