The Central Bank of Nigeria (CBN) on Thursday clarified the tier-based classification of Bureau De Change (BDCs), stating that the new guidelines follow an earlier exposure draft circulated for public input earlier this year, which the Bank has now incorporated and posted on its website on Wednesday, May 22, 2024
According to the apex bank’s Acting Director of the Corporate Communications Department, Mrs Hakama Sidi Ali, who spoke on the latest guidelines by the apex bank with journalists in Abuja, the new guidelines include two tiers of licencing.
She reiterated the Bank’s invitation to interested parties to apply for BDC licences, provided they meet the new guidelines, effective June 3, 2024, while existing BDCs will have a six-month grace period to meet the new requirements.
Furthermore, Sidi Ali said the CBN remained committed to repositioning the Bureau De Change (BDC) sub-sector to play its envisioned role in the foreign exchange market in Nigeria
Before the latest clarification, the apex had announced on Wednesday in a circular signed by the Director of the Financial Policy and Regulation Department, Haruna Mustafa, the revised guidelines with the aim of streamlining BDC operations and enhancing financial accessibility.
Under the revised guidelines, the CBN removed the mandatory caution deposit and also set up two new categories; Tier 1 and Tier 2 BDC licences.
According to the new guidelines, “A Tier 1 BDC: a. May operate in any State of the Federation and the Federal Capital Territory, b. May establish branches and appoint franchisees in any state and FCT, subject to the written approval of the CBN. c. Shall maintain a minimum distance of one kilometre between its branches, its branch and a franchisee, and between its franchisees. d. Shall exercise oversight on its franchisees. All franchisees shall adopt their franchisor’s name, logo, branding, technology platform and regulatory rendition requirements. 2 Classified as Confidential: e. Shall comply with the franchising standards prescribed in this guidelines.”
A tier 2 BDC Licence allows the operator to operate from only one state of the federation or the FCT, and it is allowed to establish five branches in a state of operation, subject to the written approval of the CBN.
However, BDC operators immediately rejected the new licensing guidelines, saying it is against best global practices.
Reacting to the latest policy measure, the President of the Association of Bureau de Change Operators of Nigeria (ABCON), Aminu Gwadebe, said: “The requirement is huge. It is not in line with global practices. Capitalisation in the UK is 50,000 pounds; in Kenya, it is $50,000 and so on. I don’t think it reflects global practice. A BDC is not a deposit taker; it is only buying and selling.
“Also, I’m afraid, we would not go the way of Algeria when they came with such policies and at the end of the day, every other player runs to the open market operations and at the end of the day, Algeria had to look for that open market to even determine their local currency exchange rate. We should be careful so that we will not throw away our experience, capacity and investment,” he cautioned
