Bureau De Change (BDC) operators in Nigeria, represented by the Association of Bureau De Change Operators of Nigeria (ABCON), are considering mergers, acquisitions, and takeovers to comply with the Central Bank of Nigeria’s (CBN) new N2 billion capital requirement for Tier-1 licenses, as the June 3, 2025, recapitalization deadline has lapsed. With over 95% of operators struggling to meet the mandate, the sector faces uncertainty, prompting calls for a further extension and clearer implementation guidelines.
CBN’s Recapitalization Mandate
In May 2024, the CBN raised the minimum capital requirements for BDCs, setting N2 billion for Tier-1 licenses (allowing nationwide operations) and N500 million for Tier-2 licenses (restricted to one state). This marked a significant increase from the previous N35 million threshold for a general license, as outlined in the CBN’s revised Regulatory and Supervisory Guidelines for BDC Operations. The reforms aim to strengthen the BDC sector’s role in Nigeria’s foreign exchange market, following stakeholder consultations and in line with the Banks and Other Financial Institutions Act (BOFIA) 2020.
The CBN extended the compliance deadline in November 2024 to June 3, 2025, due to low compliance rates. However, most BDCs remain unable to meet the new thresholds, risking closure without further extensions or support.
Operators Seek Solutions Amid Anxiety
ABCON President Aminu Gwadebe, in an interview with Nairametrics, urged the CBN for another deadline extension to ensure inclusivity and readiness. “The atmosphere is full of panic and anxiety among our members,” he said, emphasizing that mergers, acquisitions, and takeovers are viable strategies but require CBN collaboration through strategy sessions and clear communication. “It’s doable, but readiness on both ends—licensing, IT, capitalization, and operational infrastructure—is critical to avoid sinking the sector.”
Gwadebe noted that only a small fraction of BDCs have adopted these strategies, with less than 5% meeting the requirements as of May 2025. He stressed the need for partnerships, stating, “Forming alliances is the best way forward, and our members are showing growing interest.”
Uncertainty Disrupts Operations
BDC operator Adamu Ardo highlighted the sector’s challenges, noting that the uncertainty surrounding the deadline is disrupting operations. “The lack of a clear roadmap, combined with the tough economy, is putting immense pressure on us,” he said. “Most BDCs operate on thin margins, and raising N2 billion suddenly is nearly impossible for smaller operators.” Ardo added that many operators have reduced transaction volumes or suspended activities to mitigate risks, while customers are growing wary about the sector’s future.
The lack of detailed implementation guidance from the CBN has fueled rumors, further eroding market confidence. “Customers want assurance that we’ll remain operational post-deadline,” Ardo said.
Concerns Over Market Impact
ABCON has long opposed the high capital requirements, arguing that the BDC business is not capital-intensive, as it does not involve deposits or lending. The association advocates for consolidation through mergers rather than recapitalization, warning that the N2 billion threshold could exclude experienced operators and create monopolies in the parallel market. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), echoed this concern, urging the CBN to avoid policies that could concentrate market power.
Looking Forward
As the BDC sector navigates these reforms, operators are pressing for a collaborative approach with the CBN to ensure a smooth transition. While ABCON pledges support for the CBN’s goals, it emphasizes the need for extended timelines, clear guidelines, and strategic partnerships to prevent widespread closures. The outcome of these efforts will shape the future of Nigeria’s foreign exchange market, with implications for liquidity and economic stability.
