As of June 3, 2025, the Central Bank of Nigeria’s (CBN) recapitalization deadline for Bureau De Change (BDC) operators has officially expired, marking a pivotal moment in the nation’s foreign exchange landscape.
🔍 Background: CBN’s Recapitalization Mandate
In May 2024, the CBN introduced revised operational guidelines for BDCs, instituting a two-tier licensing framework:
Tier 1 BDCs: Required to have a minimum capital base of ₦2 billion.
Tier 2 BDCs: Required to have a minimum capital base of ₦500 million.
These requirements marked a significant increase from the previous general license threshold of ₦35 million. The initiative aimed to strengthen the BDC sector and enhance its role in Nigeria’s foreign exchange market.
⚠️ Compliance Challenges and Industry Concerns
Despite a six-month extension granted in November 2024, compliance levels remain critically low. Dr. Aminu Gwadabe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), reported that less than 10% of BDC operators have met the new capital requirements.
ABCON warns that the stringent capital thresholds could lead to the closure of numerous BDCs, potentially resulting in the loss of over three million jobs. The association has appealed to the CBN for further extensions and a review of the financial requirements to mitigate these risks.
🛠️ Strategic Responses and Market Implications
In response to the challenges, ABCON has proposed several strategies:
Mergers and Acquisitions: Encouraging smaller BDCs to consolidate resources to meet capital requirements.
Formation of Public Limited Companies: Establishing entities capable of absorbing multiple BDC operators.
These measures aim to preserve market diversity and prevent monopolistic tendencies that could arise from mass closures.
📉 Potential Economic Impact
Analysts express concerns that a significant reduction in the number of BDCs could exacerbate foreign exchange scarcity, widen the gap between official and parallel market rates, and hinder access to forex for small businesses and individuals.
📝 Conclusion
The expiration of the CBN’s recapitalization deadline places the BDC sector at a crossroads. While the initiative aims to strengthen the financial system, the low compliance rate and potential economic repercussions necessitate a balanced approach. Stakeholders await the CBN’s next steps, which will significantly influence the future of Nigeria’s foreign exchange market.
