Amid ongoing foreign exchange challenges in Nigeria, Bureau De Change (BDC) operators have revealed that over 91% of dollar liquidity exists outside the official financial system, creating a massive black-market economy that continues to distort exchange rates and frustrate policymakers. According to Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), tapping into this “hidden dollar ecosystem” is key to restoring stability in the forex market.
“Just like over 91% of naira cash is outside the banking system, the same applies to foreign exchange. There’s huge unaccounted liquidity that can be unlocked through strategic collaboration between the CBN and licensed BDCs,” Gwadebe said in a recent interview with Nairametrics.
This comes at a time when the naira hovers around ₦1,600/$1, despite several Central Bank of Nigeria (CBN) interventions—including the unification of the forex market in June 2023. Though CBN’s actions aimed to consolidate Nigeria’s multiple FX windows and create transparency, forex supply from official channels remains insufficient.
The Disconnect: High Demand, Poor Supply
In practice, licensed BDC operators like Adamu Ardo in Abuja say only 3 to 4 out of every 10 customer requests for dollars can be met through official channels, forcing many into the black market.
“Supply is still dragging. Even when the CBN releases some forex, it’s inconsistent. This creates uncertainty and widens the exchange gap,” Ardo noted.
While some forex has trickled in recently, it’s not enough to address demand, especially among small businesses that rely heavily on access to dollars for imports, school fees, and medical travel.
What’s Fueling the Crisis?
• Diaspora remittances are being diverted outside formal channels by some International Money Transfer Operators (IMTOs), ABCON claims.
• BDC recapitalization pressures have made it harder for many operators to remain compliant, adding to liquidity constraints.
• Global slowdowns in the US, China, and Europe are reducing trade volumes and amplifying market volatility.
• Regulatory uncertainty has spooked forex investors, reducing inflows.
The Way Forward
Gwadebe suggests unconventional solutions:
• Selling unused government assets like the Lagos Federal Secretariat and Bonny Camp to raise foreign inflows.
• Creating predictable, inclusive policies that integrate BDCs into the formal FX ecosystem.
• Legislative backing to strengthen BDC roles in FX stabilization.
He also points to India, China, and UAE—countries generating over $30 billion annually from diaspora remittances—as models for Nigeria to emulate.
Unless Nigeria effectively captures its “off-the-books” FX liquidity, currency volatility will persist, weakening investor confidence and
