95% of BDCs May Shut Down as CBN’s Recapitalisation Deadline Nears

• As the CBN’s 3 June 2025 deadline for BDC recapitalisation approaches, only about 5% of operators have met the new capital requirements, raising fears of mass closures
• The CBN insists there will be no extension, pushing for mergers to sanitise the market, though analysts warn this could lead to monopolies and reduced access to forex
• With rising demand and limited official supply, experts predict worsening dollar shortages and a widening gap between official and parallel exchange rates

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

As the Central Bank of Nigeria’s (CBN) 3 June 2025 recapitalisation deadline for Bureau De Change (BDC) operators draws near, tension is building in the foreign currency market.

According to Daily Sun findings, many BDCs are rushing to meet the stricter new capital requirements instituted by the apex bank.

This follows a statement by Aminu Gwadabe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), who revealed over the weekend that only around 5% of registered operators have been able to meet the new minimum capital requirements set by the CBN.

The implication is that marginal players could be forced out, as the apex bank is not considering extending the recapitalisation deadline.

On the other hand, the CBN appears committed to sanitising the BDC market by strategically eliminating companies that fail to meet its recapitalisation criteria, making mergers and acquisitions a welcome development.

In May 2024, the CBN raised the minimum share capital for BDCs from the previous threshold of N35 million for a general licence to N2 billion for Tier 1 licences and N500 million for Tier 2 licences.

The updated rule was issued under the Banks and Other Financial Institutions Act (BOFIA) 2020 as part of the CBN’s strategic initiative to restructure Nigeria’s foreign currency market.

Tier-2 BDCs are permitted to operate in only one state of the federation, whereas Tier-1 BDCs are authorised to operate nationwide.

There are therefore concerns that a significant contraction in the number of operators may occur after the deadline, given Gwadabe’s disclosure that the vast majority of BDC operators are unable to meet the recapitalisation criteria.

Economic analysts told Daily Sun that this could reduce competitiveness, worsen retail dollar scarcity, and potentially widen the official-parallel exchange rate disparity once again.

How the naira reacts

The CBN’s $40 million intervention last week and improved market sentiment following a 90-day tariff reprieve stemming from US-China trade negotiations helped the naira appreciate by 0.5% to N1,603/$1.

In the parallel market, however, the naira closed flat at N1,620/$1, with the apex bank’s interventions also contributing to the improvement from the previous week’s close.

Despite discussions about a possible extension of the deadline, it remains unclear whether the apex bank will introduce a merger-friendly framework in time, which would be the most practical means of saving smaller market players.

When the idea of an extension was raised, a CBN source argued that the BDCs already possess the structural and legal frameworks necessary to execute mergers effectively.

“Following poor compliance rates, the CBN extended the initial deadline by six months in November 2024.

Hence, with the calls for another extension growing, we reiterate that we will do everything possible to sanitise the market,” he said.

Analysts react

Dr Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), expressed concerns about the long-term implications of the policy, warning that the recapitalisation could inadvertently create monopolies in the foreign exchange 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 cautioned.

Experts predict that this week’s FX market may experience heightened dollar shortages due to growing demand for foreign currency and limited access through official channels. This could drive up black market rates unless immediate action is taken.

BDC operators list 3 factors responsible for dollar's crash

Legit.ng reported that the naira has appreciated significantly against the US dollar recently, strengthening by over N200 from an exchange rate as high as N1,780 to N1,500 in the past week.

Nigerians have celebrated the currency's strong performance in recent times, which has renewed hope for the Central Bank of Nigeria's exchange rate policy.

Speaking with Legit.ng on the naira's recent surge, Aminu Gwadabe, the president of the Association of Bureaux De Change Operators of Nigeria (ABCON), lauded the government and the Central Bank of Nigeria (CBN) for their efforts.

Source: Legit.ng