Bureau De Change (BDC) operators have been unable to purchase dollars from commercial banks one week after the Central Bank of Nigeria (CBN) reopened the Nigerian Foreign Exchange Market (NFEM) to them.
Some operators attributed the development to what they described as stringent conditions contained in the circular issued by the apex bank to all BDCs and authorised dealers last week. The new guidelines, they said, have created operational bottlenecks that are slowing participation in the market.
Despite the challenges facing BDCs, the naira strengthened further on Tuesday, rising to a two-year high of N1,335.96 per dollar. This represents a 0.9 percent, or N11.82, gain compared to N1,347.78 quoted on Monday at the NFEM, according to data published by the CBN. The exchange-rate gap between the official and parallel markets cooled after narrowing to 2.4 percent as of Monday.
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At the parallel market, however, the local currency held steady at N1,380 per dollar, widening the spread with the official rate to N45 on Tuesday from N33 on Monday.
A senior BDC executive who spoke with BusinessDay on condition of anonymity expressed concern over the provision requiring that any unutilised foreign exchange balances be resold within 24 hours. According to him, the rule limits BDCs’ ability to manage liquidity and meet customer demand.
“It means we will have to get the money from the customer first, ask the bank to bid, and whenever the dollar comes, we hand it over to the customer,” he said. “Our members who applied earlier thought it would be like before when the CBN directly disbursed dollars to BDCs. There will be no such disbursement again. There are many challenges. You can walk into any bank and find out if any BDC has collected dollars.”
Another operator, who also asked not to be named, said the framework has significantly altered how BDCs operate. “Everything has changed. There is no more direct supply from the CBN. The process is now entirely bank-driven, and that comes with constraints,” he said.
As of September 2024, the Central Bank sold dollars directly to eligible BDCs. In one of its circulars at the time, the apex bank said each eligible BDC would be allocated $20,000 at the approved rate and authorised to sell to end-users at a margin not exceeding one percent above the purchase rate.
“To participate in this transaction, eligible BDCs are instructed to make the necessary naira payments into their designated CBN deposit accounts. Following this, they must provide payment confirmation and submit all required documentation at the appropriate CBN branches in Abuja, Awka, Kano and Lagos to collect their dollar allocation,” the apex bank had stated.
Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), declined to comment extensively when contacted. “Operational guidelines will be provided. Let us go step by step, please,” he said.
Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), said the reintegration of BDCs into the official FX supply chain is expected to improve liquidity in the retail segment of the market. By broadening distribution channels beyond the banking system, the policy could reduce pressure on the parallel market, narrow exchange-rate differentials and moderate speculative demand.
However, he cautioned that the quantitative impact may be limited. The weekly cap on FX access, combined with overall constraints in NFEM liquidity, suggests the measure is more likely to stabilise sentiment than fundamentally transform supply conditions.
Read also: CBN’s directive on BDCs’ participation signals new phase for FX stability
“The effectiveness of the policy will depend heavily on sustained FX inflows into the official market and consistency in policy implementation,” Yusuf said.
He added that the circular’s strong governance framework is one of its major strengths. Mandatory know-your-customer procedures, electronic reporting requirements, prohibition of third-party settlements, limits on cash transactions, and the obligation to resell unused FX within 24 hours address long-standing concerns over round-tripping, speculative hoarding and operational opacity among BDCs.
“These safeguards reposition BDCs primarily as retail FX distributors rather than speculative traders, aligning their role more closely with financial-system stability objectives. If effectively enforced, the framework could enhance transparency and support the gradual formalisation of retail FX transactions in Nigeria,” Yusuf said.
