The Central Bank of Nigeria (CBN) implemented new capitalization requirements for Bureau De Change (BDC) operators, aiming to strengthen the nation’s foreign exchange market. Despite a six-month extension granted in November 2024, the deadline expired on June 3, 2025, leaving many operators struggling to comply. Industry stakeholders, led by the Association of Bureau De Change Operators of Nigeria (ABCON), are now urging the CBN for further extensions and a reassessment of the licensing requirements to prevent widespread job losses and economic disruptions.

Background: The New Capital Requirements

In May 2024, the CBN revised the operational guidelines for BDCs, significantly increasing the minimum share capital requirements. Tier 1 BDCs are now required to have a minimum capital of ₦2 billion, while Tier 2 BDCs must have ₦500 million, a substantial increase from the previous ₦35 million requirement for a general license. These changes were part of the CBN’s broader efforts to stabilize the foreign exchange market and ensure that BDCs are adequately capitalized to meet their obligations.

Industry Response and Compliance Challenges

Despite the extended deadline, compliance among BDC operators remains low. According to ABCON President Dr. Aminu Gwadabe, less than 5% of licensed currency traders have met the new capital benchmarks. This low compliance rate has created widespread uncertainty and anxiety within the sector, with many operators fearing the loss of their licenses and livelihoods.

Gwadabe emphasized the need for further extensions and a deliberate review of the financial requirements, stating, “The way forward to mitigate this is an appeal for further extension and a deliberate review of the financial requirements as some members strive to achieve them.”

Potential Economic Impact

The expiration of the recapitalization deadline without widespread compliance poses significant risks to the Nigerian economy. ABCON estimates that over three million jobs are now at risk due to the stringent capital requirements. The potential closure of numerous BDCs could lead to increased unemployment and reduced access to foreign exchange services, particularly for small businesses and individuals who rely on BDCs for their currency needs.

Gwadabe urged the CBN to continue stakeholder collaboration during any extension period to alleviate the anxiety and tension currently enveloping the sector.

Strategic Measures by ABCON

In response to the challenges posed by the new capital requirements, ABCON has initiated several strategic measures to mitigate job losses and ensure compliance:

• Continued Engagement with Regulators: ABCON is actively engaging with the CBN and other financial regulators to advocate for policy adjustments that consider the operational realities of BDCs.

• Lobbying for Policy Adjustments: The association is lobbying for a reassessment of the capital requirements, arguing that the BDC business is not capital-intensive, as they do not take deposits or lend funds to customers.

• Encouraging Mergers and Acquisitions: ABCON is promoting mergers and investor acquisitions to help smaller operators meet the financial thresholds. Proposals for mergers could allow operators to consolidate their businesses, with groups forming single legal entities to meet the capital requirements.

• Exploring Alternative Business Models: Members are exploring alternative business models, including establishing public limited liability companies, to enhance sector participation and inclusiveness.

Gwadabe noted that ABCON has applied to the CBN for a ‘No Objection’ on plans to float a public limited liability company with the capacity to absorb many members, but they received a holding response from the CBN.

The Role of BDCs in Nigeria’s Economy

BDCs play a crucial role in Nigeria’s foreign exchange market by providing retail forex services to individuals and small businesses. They help bridge the gap between the official and parallel markets, contributing to exchange rate stability. The potential mass closure of BDCs could disrupt this balance, leading to increased pressure on the naira and potential inflationary effects.

Furthermore, the loss of BDCs could push forex transactions into unregulated channels, increasing the risk of illicit financial activities and reducing the effectiveness of the CBN’s monetary policies.

Calls for a Balanced Approach

While the CBN’s intentions to strengthen the financial system are commendable, stakeholders argue for a balanced approach that considers the unique nature of BDC operations. They advocate for policies that support the growth and sustainability of BDCs without imposing undue burdens that could lead to their collapse.

A collaborative approach involving the CBN, ABCON, and other stakeholders is essential to develop a framework that ensures financial stability while preserving the vital services BDCs provide to the Nigerian economy.

Conclusion

The expiration of the CBN’s recapitalization deadline for BDCs marks a critical juncture for Nigeria’s foreign exchange market. With a significant portion of operators unable to meet the new capital requirements, the potential economic and social impacts are substantial. Stakeholders are calling for immediate action to extend the deadline and reassess the capital requirements to prevent widespread job losses and maintain the stability of the foreign exchange market.

The path forward requires a collaborative effort to balance regulatory objectives with the operational realities of BDCs, ensuring that the sector continues to contribute positively to Nigeria’s economic development.