MARKET NEWS

THE naira gained strength on Tuesday, June 3, amid concerns that there could be possible deregistration of some licensed Bureau De Change (BDC) operators yet to meet the Central Bank of Nigeria (CBN) requirement for their recapitalisation.

At the official Nigerian Autonomous Foreign Exchange Market (NAFEX), the naira appreciated by 0.29 percent to close at N1,581.59 against the dollar.

At the parallel market, it appreciated by 1.25 per cent to close at N1,595 against the dollar.

The significant improvement in the value of the naira in the parallel market comes amid the concern that most BDC operators have failed to meet the requirements for their recapitalisation.

The ICIR reports that the CBN had, in May 2024, issued new operational guidelines for BDCs.

The guidelines, effective June 3, 2024, directed all existing BDCs to reapply for new licences.

It provided that BDC operators with Tier 1 licences raised their capital base to N2 billion, while those with Tier 2 licences to N500 million.

The operators were also required to pay a non-refundable licence fee of N5 million and N2 million, respectively.

At the time, the CBN gave both the Tier 1 and Tier 2 BDC operators six months to meet the minimum capital requirement.

It later extended the deadline by an additional six months, which ended on Tuesday, June 3.

The Association of Bureau De Change Operators of Nigeria (ABCON) President, Aminu Gwadabe, has, however, raised concern that only about 10 per cent of the over 5,000 licensed BDC operators have met the new CBN minimum capital requirements.

Gwadabe, who commented recently on the matter, reportedly said the CBN’s June 3 recapitalisation deadline for the BDC operators remained “sacrosanct”.

His statement came after a stakeholder meeting with CBN the previous day, but the apex bank has yet to issue an official statement on its position on the deadline.

At a Nairametrics X Space on Tuesday, June 2, monitored by our correspondent, some financial analysts expressed mixed feelings about the deadline.

While some stand with the policy of the CBN as it will help sanitise the system, others think the apex bank is not enforcing the regulation of  BDCs correctly.

They argued that successive governments have been changing the operations of the BDCs without much effectiveness to show for it.

Some believe that if the CBN deadline remains sacrosanct, it might not lead to a monopoly in the market, but is likely to create a cartel of BDCs.

“If they become that kind of cartel, they will find a way to increase their profitability,” a business development manager and consultant, Daniel Effah, supported the argument.

The head of Financial Institutions Rating at Agusto & Co, Ayokunle Olubunmi, told The ICIR that with less than 10 per cent of BDCs meeting the deadline, it could help prone the number of licensed operators, which he believed were way more than needed in the economy.