Recapitalisation: 3m Job Losses Looms As 1,500 BDCs Fail Deadline

As the Central Bank of Nigeria’s (CBN) June 3, 2025 recapitalisation deadline for Bureau De Change (BDC) operators elapsed, about 1,500 BDCs are expected to shut down nationwide, threatening over three million jobs directly and indirectly linked to the sector.

Analysts however say the policy marks a clear shift in the CBN’s approach to foreign exchange regulation that prioritises digital compliance, fewer operators, and a more transparent market.

The CBN had raised the minimum capital requirements significantly in May 2024, mandating N2 billion for Tier 1 licenses and N500 million for Tier 2, up from the previous N35 million threshold. Despite a six-month extension granted in November 2024, less than 10% of operators have met the new capital requirements, with over 95% facing extinction due to inability to comply.

The Association of Bureau De Change Operators of Nigeria (ABCON), led by Dr. Aminu Gwadabe, has urged the CBN for further extension and policy reassessment to prevent mass job losses and economic disruption. However, the CBN has maintained that the deadline and capital requirements remain sacrosanct, emphasising the need for sector reform and improved governance aligned with anti-money laundering standards.

Analysts foresee the recapitalisation as a transformative process that will birth fewer but more digitally-driven and financially robust BDC operators, potentially fostering consolidation through mergers and acquisitions to meet the new benchmarks. ABCON is exploring models such as public limited liability companies to absorb smaller operators and enhance sector resilience.

Head of Financial Institutions Ratings at Agusto & Co., Ayokunle Olubunmi, noted that with majority of the BDCs not able to meet the new requirement, the aim of the CBN to shrink the bloated number of BDC operators in the country may have been achieved.

“CBN has stated that the number of BDCs in the market is just too many relative to the value they offer. Even in terms of transaction volumes, there’s a sense that the regulator may prefer to deal with fewer, more capitalised players,” Olubunmi said.

President of the Association of Bureau de Change Operators (ABCON), Aminu Gwadabe had told Leadership that only five per cent of his members were able to meet the the N500 million and N2 billion capital requirements for Tier 2 and Tier 1 licenses respectively, throwing nearly 1,500 BDCs out of operation.

“Some of the smaller BDCs may end up shutting down or operating under the umbrella of larger ones. We may begin to see agent-based partnerships where unlicensed players bring customers to licensed operators in exchange for shared commissions,” Olubunmi noted.

Noting that there has been a shift in transaction patterns in the foreign exchange market with increased preference of digital channels over cash-based dealings, he said “the dynamics have changed significantly since the previous CBN administration. Cash transactions are declining, digital transfers are rising, and customers are more interested in traceable, formal platforms, whether for travel, investments in Eurobonds, or money market instruments.”

He stressed that these changes are not only improving transparency but are also reducing the avenues for abuse that previously existed within the largely informal forex ecosystem. “Today, the average Nigerian who wants to buy dollars isn’t carrying cash around. Even on the street, demand for physical dollar notes is waning.

“This trend supports the CBN’s aim of fostering a smaller but more compliant pool of BDCs. The reality is that profitability is not what it used to be, and digital transactions now dominate. Those that cannot meet the new thresholds may survive by integrating into the network of bigger players” he said.

Although Gwadabe had pointed out risk of the operators pushed out of the formal foreign exchange market into the black market, Olubunmi said he expects that the unlicensed ones will work out a partnership with the licensed BDC adding that “as long as licensed BDCs are reporting transactions and remaining within regulatory oversight, even these informal partnerships can support the CBN’s broader goals of market stability and integrity.”

Gwadabe had expressed concern that many BDC operators, in a bid to survive, could be pushed into the informal currency market, beyond the oversight of regulators. “It is our concern that unable BDCs might be pushed to operate outside the regulated space, where players enjoy lesser regulatory burdens. This threatens both transparency and national security,” he cautioned.

According to him, reporting and data visibility would also be severely impacted, as BDCs that do not meet regulatory thresholds are no longer obliged to submit transaction reports to regulatory and security agencies.

He emphasised that the CBN’s goal of a well-regulated, compliant foreign exchange market would be better served by prioritising operators’ ability to meet reporting obligations, rather than capital thresholds alone. “We urge them to prioritise reporting obligations rather than financial monetary considerations,” he said.

Gwadabe added that ABCON remains committed to the regulator’s objectives and will continue to work with the apex bank on possible paths forward. “We pledge our commitment to being an enviable compliance-driven entity. The BDCs remain the most potent and effective tool of CBN’s policy transmission mechanisms,” he stated.