Over 95% of BDC operators face shutdown risk as CBN recapitalization deadline nears

With just weeks to the June 3, 2025, deadline for recapitalization, the Association of Bureau De Change Operators of Nigeria (ABCON) has sounded the alarm over the fate of licensed currency traders, revealing that less than 5% of its members have been able to meet the new capital requirements set by the Central Bank of Nigeria (CBN).

This revelation has sparked a wave of anxiety and uncertainty within the Bureau De Change (BDC) sector, as over 95% of operators may be forced to shut down unless the CBN provides another extension to the recapitalization deadline.

The concern stems from a policy move by the CBN in May 2024, when the apex bank issued new Regulatory and Supervisory Guidelines for BDC operations, increasing the minimum share capital for Tier-1 BDCs to N2 billion and for Tier-2 BDCs to N500 million — a drastic rise from the previous N35 million requirement for general BDC licenses.

The new guidelines were introduced as part of the CBN’s broader reforms aimed at strengthening the foreign exchange market and repositioning the BDC subsector to play a more defined role in Nigeria’s forex ecosystem. Tier-1 operators are licensed to operate nationally, while Tier-2 BDCs are limited to a single state.

ABCON President, Aminu Gwadebe, speaking in an exclusive interview, disclosed that the compliance rate among licensed operators remains alarmingly low. “As the deadline for recapitalization draws nearer, the entire sector is gripped with anxiety. Not up to 5% of our members have been able to meet the new financial requirements,” he said

He warned that without a further extension, over 95% of BDCs may be forced out of business. “Their fate hangs in the air except if the deadline is further extended. However, we are hopeful of the CBN Management’s humane considerations,” Gwadebe added.

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To help operators meet the new threshold, ABCON is advocating several initiatives, including strategic mergers. “We are strategically advocating for our members nationwide to consider mergers. We are also awaiting an approved framework from the CBN that would factor in existing capital levels during such mergers,” he explained.

Gwadebe reaffirmed the relevance of BDCs to Nigeria’s forex structure, describing them as “the third level of the forex market” critical in narrowing the gap between official and parallel market rates.

Meanwhile, the recapitalization policy has sparked mixed reactions from stakeholders and experts. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), warned of potential unintended consequences, stating:

“The CBN needs to be careful not to create a monopoly situation in the parallel market due to the new capital requirements. BDCs are more akin to microfinance institutions and should not be burdened with capital thresholds that do not align with their operational structure.”

On the ground, BDC operators such as Mallam Adamu, who operates from Wuse Zone 4 in Abuja, admitted the policy has created significant pressure. “Many operators are still struggling. There have been talks about mergers, but that’s a long process. Some of us will definitely be out of business, which is why we are appealing to the CBN for reconsideration,” he said.

ABCON has long opposed the hike in capital requirements, arguing that the BDC model is not capital-intensive since operators neither take deposits nor issue loans. Instead, the association has advocated for consolidation through mergers as a more appropriate path to reform.

The association had previously urged the CBN to consider a downward review of the minimum capital base — proposing N500 million for Tier-1 operators and N100 million for Tier-2 operators — to align with global best practices and preserve the diversity of players in the sector.

Despite a six-month extension granted in November 2024 to allow BDC operators more time to recapitalize, the low compliance rate raises urgent questions about the future of the sector — and whether the CBN will revisit its stance in time to prevent a mass exit of licensed currency traders.