FX Market on Edge as BDCs Scramble to Meet CBN’s Recapitalisation Deadline
The Nigerian foreign exchange market is witnessing growing tension as Bureau De Change (BDC) operators rush to meet the Central Bank of Nigeria’s (CBN) June 3, 2025, recapitalisation deadline. The stringent new capital requirements have left many operators scrambling to comply, with industry figures revealing that only about 5% of BDCs have met the criteria so far. This low compliance rate has raised concerns about a potential contraction in the number of licensed BDCs, with the CBN showing no signs of extending the deadline further.
The revised capital thresholds, introduced in May 2024, mandate that Tier-1 BDCs maintain a minimum share capital of ₦2 billion, while Tier-2 BDCs require ₦500 million, a steep increase from the previous ₦35 million baseline. The policy aims to reform and sanitise the FX space by promoting stronger, well-capitalised players and phasing out weaker operators. While mergers and acquisitions are being encouraged as a survival strategy, many small BDCs face the risk of closure due to financial incapacity.
This regulatory shift is expected to have broader implications on the FX market, particularly in terms of accessibility and competition. Experts warn that the contraction of BDCs could reduce forex availability at the retail level and deepen the gap between official and parallel market rates. Already, signs of pressure are emerging: although the naira appreciated slightly in the official market to ₦1,603/$1, the parallel market remained flat at ₦1,620/$1 despite recent CBN interventions.
Though some stakeholders are advocating for another deadline extension or a clearer merger framework, the CBN remains firm on its stance. A previous extension had already been granted in November 2024, and the bank insists that the market has adequate legal and structural support for consolidation. The regulator appears determined to implement reforms, citing the need to sanitise the sector and reduce speculative activities that undermine Nigeria’s currency stability.
Nonetheless, economic analysts like Dr. Muda Yusuf have cautioned that the policy may unintentionally foster monopolies, especially if only a few large players survive the recapitalisation. He stressed that BDCs serve as critical last-mile access points for forex, much like microfinance banks do in the credit space. With increasing demand for foreign currency and limited supply channels, the FX market could face acute dollar shortages in the coming weeks unless timely measures are taken.
Source: The Sun