Establishing and Operating A Bureau De Change Business in Nigeria; The Feasibility report.

In International trade, goods and services are traded across national boundaries though the currency of one country is not acceptable in other countries as legal tender. This creates the problem of payment. Therefore, the payments for imports have to be made in currency of the exporting country in the foreign exchange market. Foreign currencies are bought and sold in the foreign exchange market.

A bureau de change or currency exchange is a business where people can exchange one currency for another.

A bureau de change is a business which, in competition with other similar businesses, makes its profit by buying foreign currency and then selling the same currency at a higher exchange rate. It may also charge commission or fee on the purchase or sale. In setting its exchange rates, the business would keep an eye on changing market conditions as well as the rates quoted by competitors, and may be subject to government foreign exchange controls and other regulations.

Bureau De Change (BDC) is defined by the Central Bank of Nigeria (CBN) manual as a retail foreign exchange dealer carrying on the business of Personal Travel Allowance (PTA), Business Travel Allowance (BTA), medical and school fees, and also to carrying on inward and outward transfer.

The exchange rates charged at bureaux are generally related to the spot prices available for large interbank transactions, and are adjusted to ensure a profit. The rate at which a bureau will buy currency differs from that at which it will sell it; for every currency it trades both will be on display, generally in the shop window.

Nigeria’s foreign exchange market is made up of three major segments, the official, autonomous (made up of inter-bank and bureau de exchange) and the parallel markets. The various segments of the markets evolved overtime owing to developments in the economy.

The main players in the foreign exchange market in Nigeria are the Central Bank of Nigeria (CBN), Brokers, Commercial Banks, Exporters and Importers, Investors, Tourist and Immigrants, and these players make up the structure of the market. At the bottom of the foreign exchange market are the actual buyers and sellers of the foreign currencies.

In recent years together with emergence of online banking, currency exchange services have appeared on the Internet. This new model allows more competitive exchange rates and threatens traditional bricks-and-mortar bureau de change.

Online currency exchange has two (2) main models: the more popular model is provided by an established bureau de change, while social currency exchange platforms allows participants to ask or bid for currency at their own rates (usually with an additional transaction fee).

The market for bureau de change services in Nigeria is national. With a population of over one hundred and ninety million (190,000,000) people and an estimated national population growth rate of two point seven percent (2.7%) per annum, an average economic growth rate of three point five percent (3.5%) per annum in the past five (5) years, Nigeria has a large, sustainable and expanding market for bureau de change services.

The investor seeks to establish a bureau de change business licensed by the central bank of Nigeria (CBN) to provide affordable and reliable bureau de change services to persons and businesses seeking for Personal Travel Allowance (PTA), Business Travel Allowance (BTA), medical and school fees.

Table of Contents

EXECUTIVE SUMMARY 1.0 Business Overview 1.1 Description of the Business 1.2 Vision and Mission Statement 1.3 Business Aims and Objectives 1.4 Value Proposition 1.5 Critical Success Factor of the Business 1.6 Current Status of Business 1.7 Description of the Business Industry 1.8 Contribution to Local and National Economy 2. Marketing Plan 2.1 Description of Product and Services 2.2 The Opportunity 2.3 Pricing Strategy 2.4 Target Market 2.5 Promotional Strategy 2.6 Competition 3. Technical and Service Plan 3.1 Description of the Location 3.2 Equipment, Assets and Liabilities 3.3 Legal and Regulatory Requirement 3.4 Service Cost 3.5 Stock Control Process 3.6 Pre-Operating activities and expenses 3.6.1 Operating Activities and Expenses 3.7 Project Implementation Schedule 4.0 Organizational and Management Plan 4.1 Ownership of the business 4.2 Profile of the promoters 4.3 Key Management Staff 4.3.2 Management Support Units 4.4 Details of salary schedule 5. Financial Plan 5.1 Financial Assumption 5.2 Start- up Capital Estimation 5.3 Source of Capital 5.4 Security of Loan 5.5 Loan Repayment Plan 5.6 Profit and Loss Analysis 5.7 Cash Flow Analysis 5.8 Viability Analysis 6.0 Business Risk and mitigation factor 6.1 Business Risks 6.2 SWOT Analysis

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