BDC crisis looms as only 5% meet CBN’s new capital requirement, 95 may shut down

• As the CBN’s 3 June 2025 deadline for BDC recapitalisation approaches, lone astir 5% of operators person met the caller superior requirements, raising fears of wide closures
• The CBN insists determination volition beryllium nary extension, pushing for mergers to sanitise the market, though analysts pass this could pb to monopolies and reduced entree to forex
• With rising request and constricted authoritative supply, experts foretell worsening dollar shortages and a widening spread betwixt authoritative and parallel speech rates

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

As the Central Bank of Nigeria’s (CBN) 3 June 2025 recapitalisation deadline for Bureau De Change (BDC) operators draws near, hostility is gathering successful the overseas currency market.

There is hostility successful the overseas currency marketplace arsenic recapitalization deadline nears. Photo Credit: Contributor
Source: Getty Images

According to Daily Sun findings, galore BDCs are rushing to conscionable the stricter caller superior requirements instituted by the apex bank.

This follows a connection by Aminu Gwadabe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), who revealed implicit the play that lone astir 5% of registered operators person been capable to conscionable the new minimum capital requirements acceptable by the CBN.

The accusation is that marginal players could beryllium forced out, arsenic the apex slope is not considering extending the recapitalisation deadline.

On the different hand, the CBN appears committed to sanitising the BDC marketplace by strategically eliminating companies that neglect to conscionable its recapitalisation criteria, making mergers and acquisitions a invited development.

In May 2024, the CBN raised the minimum stock superior for BDCs from the erstwhile threshold of N35 cardinal for a wide licence to N2 cardinal for Tier 1 licences and N500 cardinal for Tier 2 licences.

The updated regularisation was issued nether the Banks and Other Financial Institutions Act (BOFIA) 2020 arsenic portion of the CBN’s strategical inaugural to restructure Nigeria’s overseas currency market.

Tier-2 BDCs are permitted to run successful lone 1 authorities of the federation, whereas Tier-1 BDCs are authorised to run nationwide.

There are truthful concerns that a important contraction successful the fig of operators whitethorn hap aft the deadline, fixed Gwadabe’s disclosure that the immense bulk of BDC operators are incapable to conscionable the recapitalisation criteria.

Economic analysts told Daily Sun that this could trim competitiveness, worsen retail dollar scarcity, and perchance widen the official-parallel speech complaint disparity erstwhile again.

How the naira reacts

The CBN’s $40 cardinal involution past week and improved marketplace sentiment pursuing a 90-day tariff reprieve stemming from US-China commercialized negotiations helped the naira admit by 0.5% to N1,603/$1.

In the parallel market, however, the naira closed level astatine N1,620/$1, with the apex bank’s interventions besides contributing to the betterment from the erstwhile week’s close.

Despite discussions astir a imaginable hold of the deadline, it remains unclear whether the apex slope volition present a merger-friendly model successful time, which would beryllium the astir applicable means of redeeming smaller marketplace players.

When the thought of an hold was raised, a CBN root argued that the BDCs already person the structural and ineligible frameworks indispensable to execute mergers effectively.

“Following mediocre compliance rates, the CBN extended the archetypal deadline by six months successful November 2024.

Hence, with the calls for different hold growing, we reiterate that we volition bash everything imaginable to sanitise the market,” helium said.

Expert expressed concerns astir the semipermanent implications of the recapitalization policy. Photo Credit: Contributor
Source: Getty Images

Analysts react

Dr Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), expressed concerns astir the semipermanent implications of the policy, informing that the recapitalisation could inadvertently make monopolies successful the overseas speech market.

“The CBN needs to beryllium cautious not to make a monopoly concern successful the parallel marketplace owed to the caller superior requirements. BDCs are like microfinance banks in the fiscal system; they supply last-mile entree to forex,” Yusuf cautioned.

Experts foretell that this week’s FX marketplace whitethorn acquisition heightened dollar shortages owed to increasing request for overseas currency and constricted entree done authoritative channels. This could thrust up achromatic marketplace rates unless contiguous enactment is taken.

BDC operators database 3 factors liable for dollar's crash

Legit.ng reported that the naira has appreciated importantly against the US dollar recently, strengthening by implicit N200 from an speech complaint arsenic precocious arsenic N1,780 to N1,500 successful the past week.

Nigerians person celebrated the currency's beardown show successful caller times, which has renewed anticipation for the Central Bank of Nigeria's speech complaint policy.

Speaking with Legit.ng connected the naira's caller surge, Aminu Gwadabe, the president of the Association of Bureaux De Change Operators of Nigeria (ABCON), lauded the authorities and the Central Bank of Nigeria (CBN) for their efforts.

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Source: Legit.ng