Bureau De Change (BDC) operators in Nigeria revealed that over 91% of foreign exchange (FX) liquidity operates outside the formal banking system, exacerbating volatility in the naira, which hovers near N1,600/$1. The Association of Bureau De Change Operators of Nigeria (ABCON), led by President Aminu Gwadabe, urged the Central Bank of Nigeria (CBN) to adopt a collaborative strategy to harness this unaccounted liquidity, estimated at billions of dollars, to stabilize the forex market. Speaking to Nairametrics, Gwadabe emphasized that the untapped liquidity mirrors the 91% of cash circulating outside Nigeria’s banking sector, presenting a significant opportunity if properly channeled.
The call for collaboration follows the CBN’s June 2023 unification of Nigeria’s FX markets, merging all windows into a single system to enhance liquidity and transparency. Despite reforms, including a new FX matching platform and the Nigerian Foreign Exchange Code, supply shortages persist, compounded by the CBN’s stringent BDC recapitalization requirements of N2 billion for Tier 1 and N500 million for Tier 2 licenses, up from N35 million. With the June 3, 2025, deadline passed and less than 5% compliance, over 1,500 BDCs risk closure, threatening three million jobs. At N1,579/$1, the Tier 1 threshold equates to $1.27 million, a steep barrier amid Nigeria’s economic challenges.
Gwadabe proposed leveraging BDCs’ expertise to capture diaspora remittances, which India harnesses to raise $30 billion annually for infrastructure. He accused some International Money Transfer Operators (IMTOs) of diverting remittances to informal channels, a concern echoed by commercial banks. “A cohesive strategy between CBN and ABCON could tap these hanging fruits,” he said, advocating for BDC access to banks’ autonomous windows and IMTO agencies. He also suggested selling “toxic” federal assets, like the Lagos Federal Secretariat and Bonny Camp, to generate dollar inflows, despite government policies limiting dollar-based local transactions. Gwadabe noted that agencies like immigration already accept dollar payments, suggesting flexibility in such sales.
Adamu Ardo, an Abuja-based BDC operator, highlighted the supply crunch, telling BusinessDay that official channels meet only 30-40% of customer demand, forcing reliance on the black market. “We get 10 customers daily but can only serve three or four,” he said, noting recent CBN dollar releases have slightly stabilized rates. However, inconsistent supply disrupts small businesses and travel-related transactions, with the parallel market rate at N1,630/$1 in May 2025, per @vanguardngrnews on X. Ardo manages by sourcing from private channels and setting realistic customer expectations, warning that the supply gap fuels volatility.
The forex crisis is worsened by global economic slowdowns in the U.S., Europe, and China, reducing trade volumes, and Nigeria’s domestic challenges, including a 23.71% inflation rate in April 2025 and a 6% projected naira depreciation by mid-2026, per the African Development Bank. The CBN’s tight monetary policy, with a 27.5% Monetary Policy Rate and 50% Cash Reserve Ratio, has constrained liquidity, with private sector credit falling 7.4% to N74.9 trillion in February 2025. Gwadabe criticized the recapitalization policy, arguing BDCs, unlike banks, are not capital-intensive, as they neither take deposits nor lend, making compliance costs a liquidity drain.
ABCON’s push for inclusivity includes legislative support and mergers to meet capital thresholds, with plans to form a public limited liability company stalled by CBN’s delayed approval. Posts on X, like @Nairametrics, highlight public frustration, while @thecableng notes the risk of informal market growth if BDCs collapse. Ghana’s cedi, up 50% in 2025 with IMF support, offers a contrast, suggesting Nigeria could incentivize remittances through tax breaks or digital wallets. Without urgent policy adjustments, Nigeria’s $20 billion retail forex market risks further fragmentation, undermining CBN’s stabilization efforts.
