December 11, 2025
Notable concerns have been stirred across Abuja’s foreign exchange ecosystem, over the Central Bank of Nigeria’s (CBN) decision to approve 82 new Bureau De Change (BDC) licenses with operators and analysts warning that the move, though potentially beneficial in the long term, is capable of heightening instability in the market considering past regulation.
The approvals for the licenses form part of CBN’s ongoing effort to reform and liberalize the FX market following years of inconsistent directives and extensive sanctions against operators.
However, while the apex bank sees the new licenses as a step toward increased competition and transparency, many within the industry argue that the timing and scale of the rollout could impose additional burden on the FX retail segment, particularly given the limited inflow of foreign currency and the rising cost of compliance.
In the major FX trading hubs are n Abuja, from Wuse Zone 4 to Garki, the immediate reaction to the new licensing wave has been cautious at best.
Although some operators acknowledge that new entrants may promote innovation and broaden access points for legitimate FX dealings, many fear that introducing 82 fresh BDCs at once risks flooding the market without a corresponding boost in FX supply.
An Abuja-based operator who spoke on the condition of anonymity, said the increased number of players may worsen the pressure on an already stretched retail FX environment.
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Many existing BDCs according to him have continue to struggle with declining transaction volumes, lower margins, and tighter controls introduced under the latest regulatory framework.
“Most of us are still adjusting to higher reporting obligations and increased capital requirements. Bringing 82 more BDCs into the market when the dollar supply is this thin only increases the competition for the same scarce resources,” he said.
Others BDC operators worry that more licenses could lead to aggressive undercutting among operators.
Without adequate supply from formal channels, they emphasize, a surge in participants could inadvertently revive the arbitrage-driven practices that previous reforms sought to curb.
FX analyst Chude Marvelous noted that Nigeria’s FX space remains fragile, and the sudden onboarding of dozens of new operators could replicate past mistakes.
He referenced previous eras when rapid and poorly monitored licensing created opportunities for speculative behaviour and contributed to rate volatility.
“Licensing 82 BDCs in one sweep is significant. If supervision is not airtight, we could see unhealthy competition, excessive rate fragmentation, and behaviours that undermine pricing integrity in the retail FX market,” he warned.
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Policy analyst Dr. Nathan Udo echoed similar sentiments, stressing that the CBN should have adopted a more gradual approach.
In his view, the FX market is still too vulnerable for rapid expansion of BDC participation without first bolstering inflows.
“The FX market is recovering from multiple shocks. Approvals of this scale should be sequenced, allowing the regulator to monitor liquidity conditions and operator behaviour before adding more players. Otherwise, the distortions may outweigh the intended benefits,” he said.
He added that reforms will only be effective if supported by stronger FX supply sources, particularly export proceeds, remittances, and foreign investment inflows.
Compliance obligations and capital requirements add pressure
Under the new reforms introduced by the CBN earlier this year, BDCs are expected to meet higher capitalization thresholds, adhere to stricter anti–money laundering requirements, and file real-time transaction data. Operators say while these reforms are necessary, many fear that compliance costs may put undue pressure on newcomers and small players.
A BDC owner in Abuja remarked, “The new conditions are tough. Not everyone can meet them. The question is: how many of the 82 newly licensed BDCs can operate sustainably in this environment without cutting corners?”
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Market experts insist that the CBN should adopt a phased implementation strategy to monitor how the new BDCs influence liquidity and pricing before issuing more licenses. They argue that a controlled expansion of the sector is essential to avoid replicating past experiences of oversaturation, regulatory breaches, and speculative attacks on the naira.
Financial expert and policy analyst Dr. Nathan Udo argued that the approval of additional licenses should have been “sequenced more cautiously.”
He noted, “The CBN should carefully sequence these approvals. The FX market is still recovering from previous shocks. A rapid influx of players without adequate monitoring could create distortions that outweigh the intended benefits.”
“Regulatory tightening is good, but the FX market is still fragile. Approving 82 new BDCs at once risks creating excess retail capacity without boosting supply. The likely outcome is aggressive competition, price undercutting, and possible re-emergence of parallel market distortions,” he noted.
He added that the CBN must prioritize expanding FX sources—such as diaspora remittances, export proceeds, and investment inflows—to ensure that BDC reforms produce the intended stabilizing effects.
Some industry watchers also questioned whether the new licensing wave signals a broader shift in the CBN’s FX management strategy.
After initially delisting and restricting BDCs during previous reforms, the apex bank now appears to be repositioning them as regulated partners in improving market transparency.
In 2023, the CBN revoked the licenses of 4,173 BDC operators over serial regulatory breaches, which reduced the number of active BDCs to around 1,517.
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Another Abuja-based economist, Fatima Danladi, welcomed the reforms but urged the CBN to adopt a measured approach.
“Reforms are good, but the pace must match Nigeria’s delicate FX realities. BDCs play an important role in retail FX access. However, licensing too many operators without improving dollar supply may not solve the underlying issues,” she said.
Meanwhile, several operators are calling on the CBN to accompany the licensing approvals with clear guidelines on access to official FX windows, arguing that without consistent supply, many of the newly approved BDCs could become inactive or resort to unhealthy market practices.
The CBN in May 2024, released approved guidelines for operations of Bureau De Change (BDCs) across the country while asking BDCs to reapply for licensing online with the new regulatory requirements in the next six months.
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According to the new regulatory requirements, Tier-1 BDCs are mandated to have a minimum capital base of N2 billion, while that of Tier-1 was set at N500 million.
Furthermore, the bank set the application fee for a Tier-1 license at N1 million and that of Tier-2 at N250,000. The licensing fees for Tier-1 and Tier-2 BDCs were set at N5 million and N2 million, respectively.
The bank also asked BDCS to meet the requirements of the Tier of license they are applying for within the next six months.
Subject to the approval of the CBN, the new guidelines approved for Tier-1 BDCs allowed them to operate across the 36 states of the country and the FCT and open franchises all over the country.
