…Dollar scarcity looms, experts warn
By Chinwendu Obienyi
As the Central Bank of Nigeria’s (CBN) June 3, 2025 recapitalisation deadline for Bureau De Change (BDC) operators draws near, tension is mounting in the foreign currency market.
Findings by Daily Sun indicate that many BDCs are racing against time to comply with the stringent new capital requirements introduced by the apex bank.
This comes as the President, Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, disclosed at the weekend that only about 5 per cent of licensed operators have so far been able to comply with the new minimum capital thresholds set by the CBN.
The situation, by implication, means that fringe players will be edged out as the apex bank is not looking in the direction of a further recapitalisation extension.
On the flip side, doors are open for mergers and acquisition since the CBN is insistent on sanitising the BDC space by tactically weeding out those who fall below its recapitalisation threshold.
In May 2024, the CBN increased the minimum share capital of BDCs to N2 billion for Tier 1 license and N500 million for Tier 2 license as against the previous threshold of N35 million for a general license.
The revised regulation, part of the CBN’s strategic effort to reform Nigeria’s foreign exchange market, was issued under the Banks and Other Financial Institutions Act (BOFIA) 2020.
While Tier-1 BDCs are permitted to operate nationally, Tier-2 BDCs are restricted to a single state of the federation.
Hence, with Gwadabe’s revelation that the majority of BDC operators are unable to meet the recapitalisation threshold, there are fears that a massive contraction of operators could occur post-deadline.
According to economic experts who spoke to Daily Sun, this would likely shrink competition, worsen dollar scarcity at the retail level and potentially widen the official-parallel exchange rate gap again.
The naira appreciated by 0.5 per cent to N1,603/$1, supported by improved market sentiment following a 90-day tariff reprieve stemming from US-China trade negotiations, and the CBN’s intervention of $40.00 million last week. But in the parallel market, the naira closed flat at N1,620/$1, though an improvement from previous week’s close supported also by the apex bank’s interventions.
Although there has been talks of CBN extending the deadline which would be the most pragmatic approach to salvage smaller players in the market, however, it is unclear whether the apex bank will approve a merger-friendly framework soon enough.
A CBN source insisted that the BDCs have the legal and structural support to execute mergers efficiently when the idea of extension came up.
“Following poor compliance rates, the CBN had in November 2024 extended the initial deadline by six months.
“Hence, with the calls for extension growing, we reiterate that we will do everything to sanitise the market”, he said.
Raising concerns about the long term effects of the policy, the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf cautioned that the recapitalisation could inadvertently create monopolies in the FX market.
“The CBN needs to be careful not to create a monopoly situation in the parallel market due to the new capital requirements. BDCs are like microfinance banks in the financial system; they provide last-mile access to forex,” Yusuf warned.
With rising demand for foreign currency and limited access through official channels, experts say the FX market may experience heightened dollar scarcity this week, potentially driving up parallel market rates unless urgent interventions are introduced.