Lagos, Nigeria – The Central Bank of Nigeria (CBN) has taken a significant step to curb round-tripping and enhance the naira’s stability by revoking the licenses of 2,698 Bureau De Changes (BDCs). This action leaves only 2,991 BDCs in operation, representing approximately 47.43% of the initial total.
Analysts suggest that the move is an effort to ensure the naira’s stability at its real value and reduce activities in the black market. Despite attempts to allow the naira to float to its true value, the impact has been impeded by numerous black market activities.
The CBN had previously authorized 5,689 BDCs according to a document titled “List of CBN Licensed Bureaux De Change As at December 31, 2021,” released in 2022. Over the years, the number of BDC operators had risen from 74 in 2005 to 5,689 before the Bola Tinubu administration.
Since the CBN floated the naira in June, the currency has depreciated to N795.28 at the Investors’ and Exporters’ FX window. In the parallel market, it closed at N820 per dollar, with the British pound and Euro exchanging at N1095 and N905, respectively.
In response to the license revocations, Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, noted that the action is likely connected to ongoing discussions on sanitizing the black market. As the CBN implements these measures, market watchers remain attentive to their impact on curbing currency depreciation and stabilizing the naira.
Yusuf said, “There was a time they were talking about reviewing the capitalization for the BDC. Perhaps, it is only those who met the capital requirement that have been now approved for operations.
“This may have been responsible. You know there were too many and they were just using the BDCs to favour people. When the CBN was still giving out dollars to BDCS most people were just making free money left and right using the BDCs and the authorities, some of them were using it as favour to people for key reforms, including raising the capitalisation requirements for BDC operators. Additionally, the council proposed that Nigerian banks be allowed to act as primary dealers in supplying the forex market,” he said.