Nigeria Increases Capital Requirements for Currency Dealers Nearly Sixtyfold to $1.4 Million

The Central Bank of Nigeria has increased the capital requirements for national bureau de change operators from approximately $24,000 to $1.4 million. The central bank has given operators a six-month period to comply and they must apply for new licenses. The bank’s director for risk management stated that street trading of foreign exchange is now prohibited.

Bureau de Change Operators Required to Apply for New Licenses

The Central Bank of Nigeria (CBN) has significantly increased the capital requirements for national bureaux de change (BDC) from approximately $24,000 (NGN35 million) to $1.36 million (NGN2 billion). For the so-called Tier Two BDCs, the capital requirement is now $340,000. The CBN has given the respective organizations six months to comply and asked them to apply for new licenses.

According to a report by Bloomberg, the Nigerian central bank has also banned street trading of foreign exchange. Blaise Ijebor, CBN’s director for risk management, said the ban on street trading, which also applies to BDCs, is part of measures aimed at curbing speculation against the naira. In addition, Ijebor suggested that enforcing this rule ensures all BDCs operate formally.

“Street trading of foreign currencies is not allowed. We don’t want BDCs under the trees. They should be in offices, you walk into their office, change your currency and walk away,” Ijebor said.

Parallel-Market Dealers Seemingly Disregard CBN Warning

In their ongoing fight against parallel-market traders, Nigerian authorities have in the past blamed a financial news platform and Binance for fueling the naira’s slide against the U.S. dollar. However, despite taking steps such as ordering the financial news site to stop publishing parallel market exchange rates and asking Binance to remove naira-related services from its platform, the naira has continued to lose ground against major currencies.

The Economic and Financial Crimes Commission (EFCC) has previously conducted raids against perceived strongholds of street dealers. However, this too has seemingly failed to reverse the naira’s slide. Meanwhile, Abubakar Muhammed, CEO of Forward Marketing Bureau de Change Ltd., is quoted in the report illustrating the shortcomings of the latest measure. He stated that street trading was ongoing and that the naira was, in fact, trading slightly above the official NGN1,486 per U.S. dollar exchange rate.

Meanwhile, a Bloomberg report stated that the Association of Bureaux de Changes Operators of Nigeria (ABCON) has asked the central bank to lower the new capital thresholds and give its members more time to comply.

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