The Central Bank of Nigeria (CBN) recapitalization deadline for Bureau De Change (BDC) operators officially expired today, prompting renewed appeals from industry stakeholders for an extension to safeguard three million jobs and ensure compliance with new financial requirements.
The Association of Bureau De Change Operators of Nigeria (ABCON), led by its President. Dr. Aminu Gwadabe has urged the CBN to extend the deadline further and reassess licensing requirements to prevent widespread job losses and economic disruptions.
In May 2024, the CBN raised the minimum share capital requirements for BDC operators, increasing the threshold to N2 billion for Tier 1 licenses and N500 million for Tier 2 licenses, a substantial leap from the previous N35 million required for a general license.
BDC Operators Struggle to Meet Recapitalization Requirements
Recognizing the low compliance levels, the CBN extended the initial deadline by six months in November 2024, shifting the final date to June 3, 2025, in an effort to allow more operators time to meet the new financial requirements.
Despite this extension, Gwadabe revealed that less than 5% of licensed currency traders have successfully met the revised capital benchmark, creating widespread uncertainty and anxiety within the sector.
“The way forward to mitigate this is an appeal for further extension and a deliberate review of the financial requirements as some members strive to achieve them,” Gwadabe emphasized.
Concerns Over Mass Job Losses and Economic Fallout
With the deadline now elapsed, industry stakeholders fear severe consequences for BDC operators who are unable to comply.
Gwadabe estimates that over three million jobs are now at risk due to the stringent capital requirements.
“The CBN should continue their stakeholder collaboration during the time of the extension to douse the anxiety, pressures, and tension currently enveloping the sector,” he urged.
ABCON has initiated several strategic measures to mitigate job losses, including:
- Continued engagement with the CBN and relevant financial regulators.
- Lobbying efforts to influence policy adjustments.
- Encouraging mergers and investor acquisitions to help smaller operators meet financial thresholds.
Additionally, ABCON members are exploring alternative business models, including establishing public limited liability companies to enhance sector participation and inclusiveness.
Possible Market Adjustments
Gwadabe stated that proposals for mergers could allow operators to consolidate their businesses, with groups of five, ten, or more forming a single legal entity to meet the capital threshold.
“As earlier mentioned, we have also applied to the CBN for ‘No Objection’ on our plans to float a public limited liability company with the capacity to absorb many of our members, but we received a holding response from the CBN,” he explained.
With uncertainty looming, the future of BDC operations in Nigeria depends on how the CBN responds to industry concerns and whether further extensions or policy adjustments will be granted to stabilize the sector.
What you should know
- The capital raising initiative is part of the CBN’s reforms to reposition the BDC sector better to fulfill its role in Nigeria’s foreign exchange market.
- The new guidelines were issued after consultations with stakeholders and in line with the powers vested in the CBN by Section 56 of the Banks and Other Financial Institutions Act (BOFIA) 2020.
- ABCON had always advocated against a high share capital limit for its members, arguing that the BDC business is not capital-intensive, as they do not take deposits or lend funds to customers.
