From Ngozi Onyeakusi, Lagos
The Director General, West African Institute for Financial and Economic Management (WAIFEM), Prof. AKpan Ekpo has stated that the move by the Central Bank of Nigeria to review upwards capital requirement for Bureau d Change (BDCs) may mean driving away local players from the business which in turn brings monopoly in the system.
“For me, lending rate being brought down is a major issue in the economy not BDC. I hope the move by CBN is not an attempt to drive local BDC operators out of business to allow only few major banks do forex. If that happens, it could create monopoly in the system. I hope this new policy would not result into that, because what many people, especially investors want to see is how CBN tackles the challenge of high interest rate to boost investments in various sectors of the economy, in order to create jobs”, he added.
Speaking in an interview with the journalists, Ekpo equally described the move as burdensome on the part of operators given the huge capital and limit period of time involved for the recapitalization.
Ekpo, who commended the apex for coming with policies aimed at sanitizing the forex market, however observed that it will be impossible for some BDCs to meet up with such total amount needed for the recapitalization which is up N60 million adding that the period of time given to them to recapitalize was too short.
“To start with, the move by the CBN is to sanitise the foreign exchange market by curbing the nefarious activities of some Bureau De Change (BDC) operators which I believe is a good initiative.
However, I want to look at the policy from two fronts. The first is that the minimum capital requirement of N25million for BDC operators, as announced by the apex bank, is too high. If you look at everything they have to pay, it is almost N60million. Secondly, the time given to them to raise the money is too short”, he said.
He warned that the nations Forex market may experience dearth of BDCs if the recapitalization exercise is not properly done.
“My worry is that Nigeria’s economy may experience scarcity of forex if the situation is not properly handled.
The reason being that, some operators of BDC who are not able to raise the minimum capital may simply go underground and continue to operate illegally, while others would just merge and operate in smaller units. As such, there may be scarcity of forex in the system, which could automatically make the exchange rate to go up in the short/medium term, but, in the long-run, everything may stabilise”, he cautioned.
Condemning the idea of the apex bank being the only organization giving Dollar to BDCs, stated
“Well, the reality is that CBN does a lot of serious research before coming up with any monetary policy. So, the new guideline on BDC may be based on such work. The monetary authority must have decided to regulate the activities of BDC because it is important for economic growth and development. But the question is, why should CBN be the only organisation giving Dollars to BDC? “, he queried.