The Arewa Economic Forum has sounded a stark warning about the potential consequences of the Central Bank of Nigeria’s (CBN) new recapitalization policy for Bureau De Change (BDC) operators. The Forum argues that the significantly increased capital requirements pose an existential threat to northern participation in the BDC sector, risking the displacement of thousands of small-scale operators and potentially exacerbating the already volatile security situation in the region. The Forum’s chairman, Dr. Ibrahim Dandakata, characterized the new capital thresholds as “astronomical,” far exceeding the financial capacity of most established northern BDC operators. This policy shift has raised concerns about economic marginalization and its potential to fuel social unrest in a region already grappling with significant security challenges.
The CBN’s revised regulatory framework mandates a minimum capital base of N2 billion for Tier 1 BDCs operating nationwide, and N500 million for Tier 2 BDCs restricted to a single state. This represents a dramatic increase from the previous N35 million requirement, a surge of between 1,300% and 5,600%. The Forum argues that this steep increase effectively shuts out a vast majority of northern BDCs, with over 90% of those currently able to meet the new requirements located primarily in the southern part of the country, particularly Lagos. This geographic concentration of compliant operators raises concerns about equitable access to economic opportunities and the potential for further regional disparities.
The Forum highlights the potentially devastating impact on major BDC hubs across the north, including Kano, Abuja, Sokoto, Minna, and Benin, which are now facing the risk of collapse. The policy also introduces stringent restrictions on BDC ownership, barring banks, NGOs, foreigners, and public officials, and imposes rigorous requirements for verifying the source of funds used for capitalization. These added layers of complexity further restrict access for smaller operators, particularly those in the north, who may lack the resources and expertise to navigate these intricate regulations.
The Arewa Economic Forum draws a stark contrast between Nigeria’s approach and those of other countries with thriving BDC sectors, such as South Africa, Ghana, Kenya, Egypt, and India. In these nations, BDC licensing remains relatively accessible and affordable, fostering a more inclusive and competitive market. The Forum argues that Nigeria’s increasingly restrictive model risks stifling the sector, particularly in the north, and creating an uneven playing field that favors larger, well-established operators primarily located in the south. This, they argue, could exacerbate existing economic inequalities and contribute to further social unrest.
Beyond the immediate economic repercussions, the Forum underscores the grave security implications of the policy. Displacing thousands of young people from their livelihoods in a region already plagued by terrorism, banditry, and high unemployment could have dire consequences, potentially pushing more individuals into criminal activities and further destabilizing the region. The Forum emphasizes that this is not a call for division but a plea for equity, fairness, and inclusive economic governance, urging the government to reconsider the policy’s potential to exacerbate existing social and economic vulnerabilities.
The Forum has issued a direct appeal to President Bola Tinubu for urgent intervention, urging the CBN to extend the implementation window by six to twelve months. This extension, they argue, would allow adequate time for sensitization and capital mobilization, enabling smaller operators to adapt to the new requirements and explore options for remaining in business. Furthermore, the Forum proposes the creation of northern-led BDC consortia and regional investment vehicles to empower smaller operators and facilitate their access to the necessary capital. They advocate for a more phased and inclusive regulatory approach that takes into account the regional disparities in access to capital and resources. Additionally, the Forum calls for greater transparency in the ongoing negotiations between the CBN and the Association of Bureau De Change Operators of Nigeria, ensuring that the voices and concerns of grassroots players are heard and addressed. Finally, they emphasize the importance of fairness in financial regulatory appointments to reflect Nigeria’s diversity and mitigate perceptions of northern marginalisation. This, they believe, is crucial for building trust and ensuring equitable representation within the financial sector. The president of Northern BDC Operators, Abdulwahab Yusuf, echoed these concerns, describing the recapitalization directive as “practical punishment,” highlighting the immense difficulty in raising the required capital and the lack of access to traditional funding sources like the capital market, which are readily available to banks undergoing similar recapitalization processes.
