CBN Forex Policy: Qualifications To Operate A BDC Is Really Hard

Only 8 – 10 BDC operators expected to meet-up the criteria

According to the President of the Association of Bureau De Change Operators in Nigeria, Muhammed Gwadabe, he said that the new criteria set by the Central Bank of Nigeria to become or operate a BDC are too hard.

He noted that such policies should be for developed countries and not for developing nation like Nigeria as only very few financial institutions can meet those criteria.

Godwin Emefiele, the CBN Governor, had said that there are a number of qualifications required to operate a BDC. He noted that based on the qualifications, only a maximum number of eight (8) or ten (10) would be able to become primary BDC dealers.

“There are a number of qualifications, either the size of the bank, or the size of forex transactions it had done before, the level of liquidity, the extent to which those banks have complied with CBN guidelines, regulations in the past and their level of preparedness in terms of being able to provide all the soft and hardware that is needed to operate in a very transparent manner.

“But from what we see, we do not think there’ll be more than a maximum of eight or 10 primary dealers. What that means is that you have what we can call grade A dealers and you have the grade B dealers.”

In his reaction to the new policy, Gwadabe told Punch on a phone interview that he hope the CBN forex policy is not like medicine after death. His statement below;

“I hope this CBN forex policy will not be like medicine after death because we would have done this long ago when the CBN had enough liquidity to do the exercise.

“And so coming this late, I hope it will not be an opportunity given to a few people in the financial sector because in the past we saw how this kind of opportunity was given to banks and how they behaved against the objective of that policy.

“Even the criteria to becoming a dealer are very stringent and cumbersome. How many financial institutions do you think can meet those criteria? There are just very few of them.”

“It’s an objective that is laudable and at will inject a lot of liquidity into the system but some of the tenets of the policy in terms of the new products introduced such as futures, spots and forwards contracts are for advanced economies that we lack the infrastructure to implement here in Nigeria,”