ABUJA, Nigeria — The Central Bank of Nigeria, CBN, dramatically curtailed the number of authorized Bureau de Change, BDC, dealers on Wednesday, July 19, 2023, cutting the list from 5,689 to 2,991.
The revelation came through a published list of approved BDCs from the apex bank.
A similar list from 2022 reflected the previous approval for 5,689 black market dealers, illustrating a significant reduction in one year.
This move by the CBN comes amid a boom in the number of BDC operators in Nigeria, which had surged from just 74 in 2005 to a staggering 5,689 last year.
On June 14, 2023, under President Bola Ahmed Tinubu‘s directive, the CBN introduced operational reforms to the country’s foreign exchange market, leading to the unification of the forex window.
This latest development appears to be part of those continuing reforms.
Though the reasons for this drastic reduction are not explicitly stated, it may be part of the bank’s measures to tighten control and maintain closer oversight of foreign exchange transactions.
However, reducing BDC operators could also significantly impact accessibility and competition within Nigeria’s foreign exchange market.
Further information and potential impacts of this significant decision are expected to be monitored closely by market participants and regulators.
Decentralising Currency Control: CBN Mandates Banks to Determine Forex Rates
The Central Bank of Nigeria, CBN, has announced on Wednesday, June 14, 2023, that it will now allow commercial banks to trade foreign exchange at any rate.
This significant policy change comes in the wake of the suspension of Godwin Emefiele, the former Governor of the CBN.
The new policy will shift the foreign exchange market and may have wide-ranging implications for the Nigerian economy.
Critics have previously accused the CBN under Emefiele’s leadership of heavy-handed exchange rate management, which they argued distorted the market.
The recent change effectively ends the official fixed exchange rate policy, allowing the foreign exchange rate to be determined by market forces.
This move could stimulate increased trading activity and potentially attract foreign investors.
However, it could also lead to increased volatility in the value of the Nigerian Naira.
This policy shift represents one of the first major changes at the CBN following Emefiele’s suspension.
It remains to be seen how the new leadership will navigate the potential challenges this liberalised approach to foreign exchange could present.
