News Column

BDC Association Wants Capital Base Reduced to N15 Million, Denies Funding Terrorism

July 2, 2014

Omololu Ogunmade

Bureau de Change operators under the aegis of the Association of Bureau De Change of Nigeria yesterday sought the intervention of the Senate Committee on Finance over the directive by the Central Bank of Nigeria (CBN) instructing them to raise their capital base from N10 million to N35 million and urged the committee to prevail on CBN to reduce the sum to N15 million.

Led by its acting President, Mr. Aminu Gwadabe, the group told the committee that it had met with the Governor of CBN, Mr. Godwin Emefiele, on the issue earlier yesterday and demanded a refund of N500,000 mandatory cautionary deposit collected from each of the 2,500 operators, amounting to N1.2 billion by the CBN.

According to him, the increase of the capital base from N10 million to N35 million and cautionary fee from 500,000 to N3.5 million, which he said represented 250 per cent and 1,000 per cent increase respectively, had the capacity to run most of them out of business.

He added that the new measures would destabilise the foreign exchange market and consequently create avenues for the black market to thrive.

He also claimed that the new move would render as many as 31,500 Nigerians jobless, adding, "The new policy will weaken the naira and increase inflation in the economy, a situation which the central bank is striving to manage."

He also denied the allegation that operators in the market were being used as conduits to sponsor terrorism, saying anyone who engages in the sponsorship of terrorism would eventually be caught by the long arm of the National Financial Intelligence Unit (NFIU) and other security agencies.

"The issue of money laundering and terrorism are aspects of specialised relevant agencies. The NFIU, police and customs, we believe, if they empower and strengthen these agencies, they will checkmate the activities of money launderers and terrorism financiers and bring the culprits to book.

"It should not be the primary concern of the CBN. Our members too have already been trained by the relevant agencies and are helping them understand the consequences and implications of money laundering and terrorism financing in the economy," Gwadabe said. Gwadabe, who said the group held a fruitful deliberation with Emefiele, also said the policy would lead to a further devaluation of the nation's currency since many operators would be forced out of the market, adding that since the policy was announced, the rate of naira to the US dollar had risen from N163.00 to N167.00.

According to him, the imposition of the policy on BDC operators would lead to the unchecked circulation of foreign currencies in Nigeria, claiming that the active involvement of the organised BDC operators in forex trading had greatly improved the image of the country abroad, with Nigerian travellers no longer facing arrest over the possession of fake currencies as was the case in the past.

"We appeal for the total reversal of the policy because it will force many of our members out of the market. The 100 per cent increase in the mandatory cautionary deposit will further boost the black market segment of the economy and the return of the exclusive group 'A' BDCs.

"It is our belief that the imposition of the N3.5 million mandatory cautionary deposit on 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 and impoverish the majority of the citizenry resulting to a decrease in the consumption level, savings and their ability to invest in the economy."

In his response, Makarfi assured the operators that the Senate would engage in a constructive engagement with all stakeholders on the matter until common sense prevails.

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Source: AllAfrica

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