N35m capital base needed for BDCs to operate profitably in FX market –ABCON

By Chinwendu Obienyi

The Association of Bureau De Change Operators of Nigeria (ABCON) has emphasised that a capital base of N35 million is sufficient for Bureau De Change (BDC) operators to function efficiently and profitably in the foreign exchange (FX) market.

The statement comes in response to earlier reports that ABCON had requested the Central Bank of Nigeria (CBN) to increase the minimum capital requirement for forex traders from N35 million to N350 million.

President of ABCON, Aminu Gwadede,had in response  said  that BDC business was not capital intensive as they do not take deposits or lend money to customers. He noted that the operators are licensed to buy and sell forex at the retail end of the market to buyers who already have their own funds ready for the transaction.

Gwadebe said that what the BDCs need is consolidation through mergers of operators and not necessarily recapitalization of the industry, noting that doing that might edge out professionals and highly experienced operators.

He said, ‘’BDC business is not capital intensive as they do not take deposits or lend funds to customers. The operators are licensed to buy and sell forex at the retail end of the market to buyers, who already have their funds ready for the transaction.

What BDCs need is consolidation through mergers of operators and not recapitalization of the industry. Recapitalization may edge out professionals and highly experienced operators whose valued industry knowledge will help stabilise the market.’’

On digitisation and the CBN’s vision for evidence-based decision-making, Gwadebe highlighted that licensed BDCs have digitised their operations, recording transactions on Amazon Web Service (AWS) online in real-time. This digital transformation allows for the efficient reporting of transactions through ABCON’s automation portal.

Expressing concerns over the continuous depreciation of the Nigerian naira, Gwadabe noted that the current development does not benefit the BDCs or the domestic economy. He urged the CBN to address market illiquidity by allowing BDCs access to dollars and diaspora remittances through autonomous forex windows.