The Association of Bureaux De Change Operators of Nigeria (ABCON) has announced its intention to promote the merger of several Bureaux De Change (BDC) operators, rather than a recapitalization of the industry.

This strategic decision is expected to have far-reaching implications on the nation’s foreign exchange market.

ABCON’s President, Alhaji Aminu Gwadabe, made this declaration in a statement released on Thursday.

According to Gwadabe, the primary objective of this proposal is to facilitate smoother interactions with the Central Bank of Nigeria (CBN) and strengthen the industry’s overall structure.

The merger strategy, which was previously implemented for class ‘A’ BDCs in 2007/2008, granted them a $1 million weekly allocation based on a minimum capital base of N500 million.

ABCON is now advocating for a similar business model to be applied industry-wide, insisting that mergers and consolidation as the preferred method of achieving this goal, rather than imposing higher capital requirements on individual operators.

Under the suggested plan, CBN-licensed BDCs, each initially capitalized at N35 million, would be encouraged to voluntarily consolidate. The outcome would be the formation of more substantial entities with a minimum capital base of N350 million.

This restructuring is anticipated to broaden the scope of BDC operations, diversify their sources of income, and alleviate regulatory pressures.

Speaking on the potential benefits of this strategy, Gwadabe highlighted the increased readiness of merged BDCs to play a more significant role within the financial system. This could include handling diaspora remittances and other offshore funds, ultimately enhancing forex accessibility at the retail level of the market.

Drawing a parallel to a similar consolidation exercise carried out in the banking sector in 2004, Gwadabe emphasized that the CBN’s adoption of this approach for BDCs would lead to a streamlined industry with fewer, but stronger, operators. This, in turn, would maximize their impact on the foreign exchange market.

Addressing recent reports suggesting that ABCON was advocating for BDC recapitalization, Gwadabe firmly rejected this narrative.

He clarified that the association’s objective was to encourage multiple mergers within the industry to reduce the number of operators, thus facilitating more effective regulation.