CBN to refund capital deposits & licensing fees of Bureau De Change operators

The Central Bank of Nigeria has recently announced a significant change in policy that has sent shockwaves through the financial sector. The apex bank has instructed all Bureau De Change (BDC) applicants with pending licenses to request a refund of the 35 million naira capital deposit and the one million naira license fee payment immediately. This decision comes in the wake of the CBN's suspension of processing licenses for BDC operators. The move is part of the bank's strategy to curb the use of BDCs in the foreign exchange market and instead rely on commercial banks for foreign exchange transactions. The impact of this decision is already being felt in the market, with the Naira experiencing a depreciation in value. Within the span of 24 hours, the Naira has weakened from less than 500 to about 525 and is expected to continue on a downward trend. The CBN's decision has raised concerns about the medium to long-term outlook for the Naira and the overall liquidity in the market. Sam Chidoka, the CEO of Kairos Capital, weighed in on the implications of the CBN's directive. Chidoka highlighted the potential job losses that could result from the decision, noting that the BDC sector employs thousands of individuals. He also emphasized the liquidity challenges that the market may face as a result of the shift towards using commercial banks for foreign exchange transactions. While the immediate impact of the CBN's policy change is already evident, Chidoka pointed out that a normalization of prices is expected within the next two to three weeks as banks adjust to the new regulations. However, questions remain about the feasibility of the CBN's approach and whether relying solely on commercial banks for foreign exchange transactions will address the underlying issues in the market. In addition to the changes in the foreign exchange market, President Muhammadu Buhari's recent pledge to increase the education budget by 50% in two years and double it by 2025 has raised concerns about the feasibility of such a significant budgetary adjustment. Chidoka expressed skepticism about the funding sources for this ambitious education budget increase, highlighting the current high debt service ratio and the need to prioritize spending in other areas. As Nigeria grapples with these economic challenges and policy changes, all eyes will be on how the government and financial institutions navigate the shifting landscape. The implications of the CBN's decision to suspend BDC licenses and the potential effects on the Naira and economic stability remain key concerns for stakeholders in the financial sector.