The Association of Bureaux De Change Operators of Nigeria (ABCON) has put forward the idea of mergers within the Bureaux De Change (BDC) sector, rather than calling for recapitalization. ABCON believes that such mergers would enhance corporate governance and the rules of engagement with the Central Bank of Nigeria (CBN).
This merger approach has a precedent as it was implemented for class ‘A’ BDCs in 2007/2008. Under this arrangement, class ‘A’ BDCs were entitled to a weekly allocation of $1 million, provided they maintained a capital base of N500 million.
ABCON has suggested adopting a similar business model through mergers and consolidation, instead of revising the capital base requirements for individual operators. The President of ABCON, Alhaji Aminu Gwadabe, clarified that the group did not request an increase in the mandatory regulatory approved capital base of N35 million for each BDC. Instead, ABCON proposes that at least 10 BDCs merge to form a new capital base of N350 million.
This approach is expected to broaden the scope of BDC operations, diversify their sources of funding through various channels, and reduce regulatory pressures. A merger of multiple BDCs into a stronger entity would position them for a more significant role in the financial system, including handling diaspora remittances and other offshore funds to enhance forex accessibility at the retail level.
Gwadabe emphasized that ABCON rejects reports suggesting BDC recapitalization, citing media misinterpretation of their stance. The group’s focus is on facilitating multiple mergers within the industry to reduce the number of operators, thus enabling more effective regulation. This approach aims to prevent the potential extinction of BDCs, as occurred in 2014 when there was a straightforward review of capital requirements.
ABCON also recommended that the CBN refrain from issuing new licenses during this period to prevent venture capitalists from taking over the business from experienced operators.
Gwadabe highlighted the significance of supporting the BDC business, which employs over 40,000 Nigerians, for sustained economic growth and job creation.
He clarified that BDCs deal with foreign currencies obtained from private sources and other sources, including CBN windows, as determined by the CBN for purposes such as funding Business Travel Allowance, Personal Travel Allowance, school fees payments abroad, medical expenses, mortgages, personal home remittances, and subscriptions.
ABCON affirmed its commitment to complying with the reporting of suspicious transactions, as directed by relevant authorities like the NFIU, CBN, and EFCC.