In a significant move, the Central Bank of Nigeria (CBN) has announced the withdrawal of operating licenses from 2,698 Bureau de Change (BDC) operators.
The apex bank simultaneously released a list of approved dealers, reducing the total number of approved BDC dealers to 2,991.
The CBN’s publication titled ‘Approved BDCs’ revealed the withdrawal of licenses from the aforementioned 2,698 BDCs. This action follows a similar move in 2022 when the CBN published a document listing 5,689 licensed Bureaux De Change as of December 31, 2021.
BDCs have played a pivotal role in influencing the exchange rate in Nigeria. Over the years, their numbers grew significantly, from 74 in 2005 to 5,689 in 2021. However, the sector witnessed a surge of more than 100 percent under the leadership of Emefiele, who later banned the sale of foreign exchange to BDCs due to concerns of round-tripping and involvement in illegal financial flows.
During the tenure of Bola Tinubu, the Policy Advisory Council Report’s National Economy Sub-committee recommended key reforms, including raising the capitalization requirements for BDC operators. Another suggestion put forth by the council was to allow Nigerian banks to function as primary dealers in supplying the forex market.
Since the CBN floated the naira in June, the currency’s value has depreciated significantly. At the Investors’ and Exporters’ FX window, the naira fell to N795.28 against the dollar. The situation is even more challenging at the parallel market, where the naira closed at N820 per dollar, N1095 per British pound, and N905 per Euro.
Aminu Gwadebe, the President of the Association of Bureau De Change Operators of Nigeria (ABCON), recently expressed concern over the exclusion of BDCs from the I&E (Investors’ and Exporters’) window. Gwadebe emphasized that the volatility of the naira continues to hinder Nigeria’s economic growth. While acknowledging the positive aspects of the I&E window, he stressed the importance of including the interests of BDCs in its policy implementation.
The current development of license revocations and the exclusion of BDCs from the I&E window is likely to have a significant impact on the forex market, further contributing to its volatility.
