The Association of Bureau De Change Operators of Nigeria has urged the Central Bank of Nigeria to review the N35 million mandatory cautionary deposit for bureau de change operators.
ABCON’s President, Alhaji Aminu Gwadabe, made the call at a meeting organised by the association for its members on Monday in Lagos.
Gwadabe said that the association had recommended the categorisation of the operators with different scopes of business.
He urged the CBN to initiate stakeholders’ sensitisation meetings for a comprehensive discussion of monetary policy related issues before the implementation of the new policy.
The association president said that the capital requirement for the operators did not require periodic increases as obtained in other financial institutions.
He said: “However, it had been reviewed from N250,000 to N500,000 and then N10 million.
“Therefore, we recommend that BDC capitalisation requirement should be reviewed to a maximum of N15 million.
“We also recommend refund of the earlier N500,000 mandatory cautionary deposit of over 2,500 of members before the introduction of additional $20,000 (N3.5 million).”
Gwadabe said that the N500,000 deposit had been with the CBN for more than 10 years.
Gwadabe also urged the CBN to ensure constructive engagement of the stakeholders and extension of the deadline for the deposit.
Gwadabe said that without the engagement, it would be difficult to settle at the N35 million deposit.
He said that the new policy had the potential to send some operators out of business, thereby destabilising the foreign exchange market.
Gwadabe also said that the policy might empower the black market as well as widen the exchange rate premium.
He said: “For instance, the BDCs employ five directors and a minimum of four employees each, totaling nine employees per BDC.
“Since we have over 3,500 existing BDCs, therefore, the total job loss will be nine times 3,500, which will result in 31,500, if this policy is implemented.
“Besides, we cannot quantify the multiplier effect of other family members that rely on the BDCs for their daily livelihood.
“This will increase poverty and insecurity in the system.
“Please, let us avoid this.”
Gwadabe said that the new policy would also weaken the naira as well as prompt increase in inflation.
Gwadabe added that data collection for policy formulation would be reduced as many BDCs might close shop and some others end up in the parallel market.
He said that the policy would bring back the circulation of fake currency that had been eliminated or reduced to the barest minimum, thereby project a negative image of Nigerians abroad.
Gwadabe said that the 1,000 per cent increase cautionary deposit would further boost the activities of the black market segment of the economy and the return of the past exclusive group ‘A’ BDCs.
He said: “It is our belief also that the mop up of N35 million mandatory cautionary deposit per BDC for about 3,500 BDCs across the country is almost half the size of the Nigerian budget.
“This chunk of resources will be in a non-interest yielding account, which is counter-productive as the mop up will give government more money.
“It will also impoverish the majority of the citizenry, resulting in a decrease in their consumption level, savings and abilities to invest in the economy.”
The CBN reviewed the minimum capital requirement BDCs from N10 million to N35 million on June 3.
The CBN also reviewed the mandatory cautionary deposit to N35 million from $20,000 USD (N3.5 million), while it increased application fee from N10,000 to N100,000.
It also reviewed the licence fee from N100,000 to N1 million, frowned at multiple ownership of BDCs and access to inward and outward money transfer, among others.
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