Over 3 million BDC operators face shutdown over N2 billion capital rule

• BDC operators warned that over three million Nigerians could lose their livelihoods if BDCs shut down due to their inability to meet the Central Bank’s new capital requirement
• ABCON President Aminu Gwadebe revealed that fewer than 10% of BDCs have met the recapitalisation threshold, calling the requirements excessively high and likening them to those imposed on banks
• He also criticised the CBN for not enforcing policies that would support BDCs, such as granting them reliable access to the foreign exchange market

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

Three million Nigerians might lose their livelihoods if Bureau De Change Operators (BDCs) shut down due to their inability to meet the new capital requirements, the Association of Bureau De Change Operators of Nigeria (ABCON) has warned.

In an interview with The PUNCH over the weekend, ABCON President Aminu Gwadebe revealed that fewer than 10% of his members have met the new capital level set by the Central Bank of Nigeria (CBN).

Under the CBN’s May 2024 guidelines, BDCs with Tier 1 licences are required to have a capital base of N2 billion, while those with Tier 2 licences must maintain N500 million. The non-refundable licence fees are N5 million and N2 million, respectively. According to a November report from ABCON, the Central Bank extended the deadline for BDCs to recapitalise by six months. The new expiration date is Tuesday, June 3, 2025.

Speaking with The PUNCH ahead of the deadline, Gwadebe said:

“It’s a tough one. It is glaring that many of us will be out of business. As we speak, I’m not sure that up to 10 per cent have completed the capitalisation process. Over three million people may lose their livelihoods as a result of this issue, either directly or indirectly. We are talking about 1,500 entities, with employees and families who will be impacted. It’s a disturbing phenomenon, as many of us will hardly meet the deadline.”

The ABCON president added that industry participants have been engaging with the CBN on the recapitalisation issue.

Gwadebe asserted that the main challenge in meeting the new capital threshold is its prohibitive nature.

He said:

“The amount required is huge—N500 million or N2 billion is not a joke. For a retail entity, a Bureau De Change is just like a bookshop. The model being used for us is entirely a bank model.”

While noting that the model has potential advantages, he pointed out that the industry is losing potential investors due to a lack of enforcement by the CBN.

He explained:

“The model comes with some benefits, which they said the Bureau De Change is going to enjoy. But, you know, for me, it’s still going to be a very tall order—except if the CBN enforces some of these benefits. One of the stated benefits is that the BDCs will be allowed to access the FX market. However, our experience has shown that when the CBN issues circulars instructing banks to sell to BDCs, banks rarely comply.

“As we speak, there is a circular that expired on May 31st, which was issued around February or March, directing banks to sell to BDCs. Yet, many banks have not complied with the circular, and the Central Bank has not enforced it.

“So, there is a need to look at it critically—either allow BDCs to access the market directly, not through the banks, or have the Central Bank allocate directly from the interbank market to BDCs. That’s the only way I think it can work efficiently and effectively. Otherwise, you cannot expect an investor to commit N500 million or N2 billion and still be unable to access the market due to enforcement failures.

“Other benefits accruing to BDCs that meet the new capital threshold include participation in diaspora remittances. However, they said BDCs can only act as agents for inward transactions.”

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 (CBN) 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