Nigeria Content Online

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has withdrawn the licences of the 50 Class A Bureau de Change (BDCs)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whose licences have been withdrawn, are free to apply for Class ‘B’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.