Why the Naira Is Expected to Strengthen in 2025: Insights from Bureau de Change Operators
Bureau de Change (BDC) operators in Nigeria are optimistic about the Naira’s performance in 2025, citing expected reforms in the country’s foreign exchange (forex) market as a key factor. They believe these changes could stabilize the currency, boost investor confidence, and improve forex trading efficiency.
The Role of Policy Reforms in Strengthening the Naira
BDC operators have identified upcoming policy reforms as a driving force for currency stability. These reforms, they argue, will increase transparency in the forex market, attract foreign investments, and streamline diaspora remittances.
However, operators are concerned about the Central Bank of Nigeria’s (CBN) recapitalization policy, introduced in May 2024. The policy requires Tier-1 BDC operators to raise their minimum capital base to ₦2 billion, while Tier-2 operators must meet a threshold of ₦500 million.
Concerns About Recapitalization Policy
BDC operators warn that the recapitalization mandate could harm smaller operators, forcing them out of business and centralizing market control. Many fear this could destabilize the forex market and counteract efforts to strengthen the Naira.
According to Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria (ABCON):
“While this policy could foster resilience in the sector, it marginalizes smaller operators, who play a crucial role in providing forex access at the grassroots level.”
Gwadebe also highlighted the importance of maintaining investor confidence and continuing policy reforms to ensure Naira stability.
Challenges with Weekly Forex Purchase Limits
Another key issue raised is the CBN’s $25,000 weekly forex purchase limit for BDC operators. Introduced in December 2024 and set to end in January 2025, the policy has faced challenges due to reluctance from commercial banks in implementing it.
Gwadebe explained:
“From inception, this policy faced implementation hurdles. Banks are hesitant to follow the CBN’s directive, which has delayed its impact. Extending the deadline could help stabilize the forex market.”
He called for better liquidity in the retail forex market to curb volatility, emphasizing that inflation and currency instability must be tackled simultaneously.
Impact of the Recapitalization Policy
The recapitalization policy has significantly impacted BDC operators, with many struggling to meet the new requirements. Gwadebe stated:
“₦2 billion is a steep requirement. We are encouraging mergers to help members comply, but thousands of operators are at risk of shutting down, which could weaken the Naira further.”
Despite these challenges, the CBN provided some relief by waiving annual renewal fees for 2025 and extending the recapitalization deadline to June 2025.
Maintaining Liquidity and Market Confidence
BDC operators emphasize the need for liquidity and stability in the forex market. Gwadebe noted:
“Ensuring liquidity and stabilizing exchange rates is critical for market confidence. The government must create an enabling environment for BDCs to thrive.”
A CBN official, responding to allegations of non-compliance by commercial banks, advised BDC operators to file formal complaints for sanctions and potential extensions to policies like the weekly forex limit.
The outlook for the Naira in 2025 appears positive, driven by anticipated reforms and increased market confidence. However, challenges such as the recapitalization policy and the implementation of forex limits must be addressed to maintain stability and ensure the inclusive growth of the forex market.
