The Central Bank of Nigeria (CBN) has formally licensed licensed Bureau De Change (BDC) operators to participate directly in the Nigerian Foreign Exchange Market (NFEM). The policy shift, outlined in a recent circular, aims to enhance foreign exchange liquidity at the retail level and better serve legitimate end-user demand.
Under the new framework, each licensed BDC is permitted to purchase up to USD 150,000 weekly from the market. These purchases must adhere to existing operational guidelines for BDCs and cannot result in the operator holding an open foreign exchange position; any unspent dollars must be resold within 24 hours. BDCs may access foreign exchange through any Authorised Dealer Bank of their choice at prevailing market rates, a move designed to deepen efficiency and broaden access.
The directive imposes stringent compliance and risk-management conditions. Authorised Dealer Banks are mandated to conduct thorough Know-Your-Customer (KYC) and due diligence checks on BDC clients prior to any foreign exchange sale. To ensure transparency, all licensed BDCs must submit timely and accurate electronic returns to the CBN. Settlement of all transactions must occur through accounts with licensed financial institutions, with cash settlements capped at 25% of a transaction’s value. Third-party transactions are explicitly prohibited.
These measures represent a calculated effort by the CBN to integrate the BDC segment more formally into the official market structure. BDCs are key retail-level intermediaries in Nigeria’s foreign exchange ecosystem, often serving individuals and small businesses. By granting regulated market access while enforcing strict transactional controls, the CBN seeks to absorb excess demand from unofficial channels, reduce spread anomalies, and strengthen oversight of foreign exchange flows.
The policy balances two objectives: expanding legitimate supply points for retail FX users and maintaining robust safeguards against misuse. Successful implementation will depend on rigorous enforcement of the compliance conditions by both dealers and the BDCs themselves. market observers will watch for the policy’s impact on parallel market rates and the overall stability of Nigeria’s foreign exchange reserves as the new framework takes effect.
