The owners of the Nigerian Bureau de Change (BDC) shared a shocking revelation with the world: more than 90 percent of dollar liquidity in Nigeria is already in the system, where nobody will be willing to go.Â
“The untapped resource can be a strategic reserve,” ABCON President Aminu Gwadebe views if only the Central Bank of Nigeria would collaborate with the BDCs.
Since the CBN consolidated the fragmented FX windows in June 2023, it has labored to stabilize and give visibility to the forex market. This notwithstanding, however, most policymaking is for naught, other than to take advantage of their idle dollar buffers and technical expertise, according to BDC operators.
Gwadebe calls on the CBN to mainstream BDCs, including access to the official off-market window and international money transfer mechanisms. He compares money outside banks: “Just like more than 91 percent of money is outside the banking subsector, the same applies to FX liquidity.“
Diaspora Remittances Remain Hidden
Gwadebe alludes to the massive diaspora remittance potential—funds that drive economies such as India’s trade, which receives over $30 billion in inflows annually. Remittances into Nigeria find their way underground and are not on policymakers’ radar when setting FX policy. BDCs via IMTOs have been blamed for diverting such remittances from banks, eroding central control.
Supply Constraints Demand Policy Reboot
BDC operators continue to grapple with a shortage of dollars from the official avenues. Abuja BDC operator Adamu Ardo speaks of days when they can do no more than 30–40 percent of demand. “Official channel supply is not coming as it should,” he affirms. Despite occasional intervention by the CBN, the shortage persists, pushing operations into the parallel market and enhancing volatility.
Solutions Worth Considering
Abcon suggests drastic measures to offset the liquidity shortfall. Gwadebe suggests selling stagnant government assets, such as the Lagos Federal Secretariat and Bonny Camp, to draw foreign money inflows. He contends that government ministries, in fact, process dollar transactions and can pay such inflows without contravening currency laws.
He argues that The ultimate objective is to have an open FX system, where approved BDCs are linked to banks, IMTOs, and CBN windows to create a strong, well-stocked foreign exchange market.
Why This Matters
Currency volatility undermines business confidence, deters trade, and slows economic recovery. With the bulk of the dollars out of sight, central banks cannot stabilize exchange rates or satisfy transaction demand. Nigeria’s FX volatility, characterized by its precipitous drop, is the fruit of a weakened system.
Work-drive BDCs to operate their business transparently with banks, and money transfer facilities can be a potent step towards Nigeria’s preparedness for various international and domestic shocks. Better regulation, technology adoption, and availability of official FX windows enable licensed BDCs to become useful players in building currency stability.
