In a move to check currency speculation, the Central Bank of Nigeria (CBN) has withdrawn the licences of the 50 Class A Bureau de Change (BDCs) operating in the country.
A statement posted on its website on Wednesday, and signed by Mohammed Abdullahi, the CBN head of corporate communications, said the withdrawal, which takes effect on November 8, is part of measures to stem the gross abuses of the enhanced Class ‘A’ BDC, in line with its avowed commitment to eradicate money laundering.
The Class ‘A’ BDCs, whose licences have been withdrawn, are free to apply for Class ‘B’ licence, with the attendant privileges, by fulfilling the stipulated licencing requirements, says the Central Bank.
“The CBN shall also, within 30 days, refund all mandatory caution deposits lodged with the Bank,” the statement added.
The Central Bank had on February 26, 2009, restructured BDCs into categories A and B, in order to further liberalise the foreign exchange market and enhance its efficiency. The main objective was to facilitate end-user access to foreign exchange supply from official sources in order to boost economic growth by promoting productive efficiency of small and medium scale enterprises.
Such BDCs were expected to have a minimum capital of N500 million verifiable at all times, a mandatory deposit of $200,000, non- interest bearing, non-refundable application fee of N100, 000, licencing fee of N1 million, and annual renewal fee of N250,000.
Gross abuse
The CBN statement said that the latest appraisal of the policy initiative has revealed gross abuses of the enhanced official funding of the Class A category of the BDCs and the negation of the expected benefits to the economy.
“Available information also revealed that the target end-users have been sidelined, while large transactions that should have been channelled through the banking system have been carried out through Class ‘A’ BDCs,” the statement said.
The CBN said it has also been inundated with complaints from foreign countries that some Nigerian travellers indulge in cross-border transportation of large sums of foreign currency in cash.
“Indeed, returns from the Nigerian Customs Services on foreign currency declaration by travellers show that large amounts, up to $3million cash, have been taken out of the country by individuals in single trips.”
These, according to the CBN, are worrisome developments that negate the expected benefits from further liberalisation of the foreign exchange market.
Incidentally, the CBN had said that the failure to fully comply with the anti-money laundering law, among other laws and regulations and checking leakages in the system, as reasons for classifying BDCs last year.
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