News Column

Makarfi - CBN's BDC Policy Unfair, Unjust, Inequitable

July 1, 2014

Omololu Ogunmade

The Chairman, Senate Committee on Finance, Senator Ahmed Makarfi, yesterday criticised the new plan by the Central Bank of Nigeria (CBN) to bench the capital base for Bureau de Change (BDC) operations at N35 million, describing it as unjust, unfair and inequitable.

Makarfi, who made this remark while answering questions from journalists in Abuja yesterday said the policy should be optional, noting that operators of BDC would be running at a loss if such a high capital base is set for them.

According to him, CBN could only justifiably raise the capital base of BDC if operators in the market would not have to make the bulk of their purchase from the government adding that if capital base is set for operators in foreign exchange (forex) market, they must be free to make their purchase wherever they choose to do it.

He argued that in foreign countries, whereas governments can sell forex to BDCs with a view to regulating the market, whatever they sell is however, dependent on what they buy, submitting that capital base should be set for only those who want to buy from the government but the policy must not be binding on those who choose to make their purchase elsewhere.

"How much forex is the CBN prepared to be selling to those who will be tying down their interest free? Look at the opportunity cost. Except if you will be selling forex that somebody ties down at N35 million and make a living. If the reason for raising the capital base is because of scarcity of forex, that means government does not have enough to sell. You should not be living for high capital because that would make the operators to make losses. It is a plus, minus issue here - opportunity cost. If CBN wants to qualify or wants to bring out certain policies that will qualify operators of Bureau de Change to buy from it, there is no harm making such a policy.

"If it wants to raise capital base for those that are buying forex, it may do so but the bulk of operation of Bureau de Change should not be because they are going to buy from the government. In other countries, government can sell forex to Bureau de Change in order to regulate exchange rate through various means. But the day-to-day activities of the Bureau de Change is not like that. They sell based on what they buy. With the minimum capital requirement for you to open bureau de change, you should be allowed to operate and buy your forex where you can get them and sell and make a living. But if CBN is saying you need a minimum capital base of N10 million or more before it can sell, then it must sell what is commensurate with what the capital outlined out.

"The CBN should make it an option, pay the minimum capital base if you want to buy forex from CBN or ignore the directive if you have alternative way of sourcing forex. CBN should guarantee selling at minimum rate of exchange. For me, a policy like that could makes sense if they have much to sell but to clamp such a standard on everybody without an assurance of what they can sell, that will be commensurate with the capital you are asking the people to tie down. I think it is not just, it is not fair, it is not equitable," Makarfi said.

The senate Committee Chairman added that whereas the House of Representatives had formally adopted a motion in opposition to the move, the Senate would address the matter from another perspective. THISDAY learnt yesterday that Senate Committee on Finance would have a private meeting with CBN today with the intention to thrash out the issue.

He also slammed the CBN Governor, Mr. Godwin Emefiele, over his perceived volte face on his promise during his confirmation by the Senate in March that he would slash interest rates, saying such development was not complimentary to public officers.

"The issue of the statement made by the CBN governor talking about the reduction of the interest rate could be compared with when the late Bola Ige made a statement on the improvement of power supply before he assumed office as Minister of Power and met something different on resumption into the office. Of recent, the Chief of Defence Staff said something like that and had to quickly come out to say he was misquoted.

"What this means is that leaders should always think before they talk; they should know the fact before they make statements especially when they are occupying a sensitive position. It is not good that you say something today and change your position tomorrow. It is good to wait a while, gather the necessary facts you need so that when you speak, you speak once and people can make medium and long term decisions. Maybe that is a baptism for him and may be that will teach him a lesson not to talk before knowing all the facts," he added.

Makarfi also expressed displeasure over the interference of the judiciary in legislative activities which had stalled planned probe of N10 billion allegedly spent on the aircraft hired by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, saying the court decision was very wrong.

While he agreed that the court could nullify a legislation, he said such intervention should only occur when there is unconstitutional legislation as he suggested the need for heads of both institutions to discuss on how to avert overlap in their respective duties.

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Source: AllAfrica

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