3 minutes read

On July 27, 2021, The Central Bank of Nigeria made known its decision to ban the supply of FX to Bureau de change operators as part of its efforts to clamp down on illegal activities of some of the operators. 

Bureau de change is a business whose customers exchange one currency for another. 

The reason for the suspension

The CBN governor, Mr Godwin Emefiele, accused the BDC operators of creating artificial scarcity for their benefit. He also outlined other reasons such as: 

  • large margins, 
  • dollarization of the Nigerian economy, 
  • subversion of the cashless policy, 
  • joint ownership of several BDC by the same owners to obtain multiple FX, 
  • International organization and embassy patronage of illegal FX dealers.

While the reasons for the ban seems like a good move by the CBN, it could see the Naira hit an all-time low. 


In 2016, the Central Bank of Nigeria banned foreign currency sales to Bureau de change operators. The apex bank’s governor made that decision to reduce pressure on the country’s foreign reserves. Nigeria lost an estimated $170 million in January 2016, causing the CBN to take that measure.  

However, that decision will not go down as one of CBN’s wisest due to the following events. 

The aftermath of the BDC sales ban in 2016

  • By December 31, 2016, Naira to Dollar exchange rate depreciated from N268/$1 to N495/$1.
  • The dollar gained 85% against the Naira, and devaluation was 46%
  • For instance, if you held $100, which was worth 26,800 in January 2016. The exact dollar value was worth N49,500.

Why did the Naira depreciate so severely in 2016?

The dollar remained scarce at the retail and wholesale end of the forex market. The scarcity created drove people to the black market to get forex and those who could get forex from the official sources sold to the black market to get more value. By early 2017, the dollar-naira exchange rate had hit N505/$1. 

What CBN’s latest move could mean for the Naira

If history repeats itself, and the Naira depreciates by 46%. We could be looking at N925/$1 within the next 12 months. Also, prices of goods and services could skyrocket if the policy is not well implemented. Already the news caused a spiral effect on the Naira during the first few days.

There will likely be a sharp increase in FX orders in Nigerian banks following this move as FX customers will shift their focus to FX desks at bank branches. The Central Bank will have to eliminate administrative bottlenecks, which could aggravate the FX crises. 

How to maintain your currency value*

Going by the historical precedence, the Naira may fall further against the dollar. That is why it may be a good time to think about investing or saving your Naira in a stronger currency to retain the value. The essence of this is to maintain your purchasing power while the Naira recovers against the dollar. During this period, consider investing in US stocks through Passfolio. 

Start Investing in the US Stock Market Today

Don’t have Passfolio yet? Sign up now! With Passfolio Securities, you can invest in the US stock market using your local currency and deposit methods** such as TEDs. 

*Please note this is only a prediction, going by historical precedents, and we are not certain about what will happen to the Naira in the coming months.

**Currency and cryptocurrency exchange services provided by Passfolio Financial LLC (“Passfolio Crypto”), a US Money Services Business registered with FinCEN. Passfolio Financial LLC is not a broker dealer.

Please see our fractional shares disclosure.

Securities less than $5 cost $0.02/share. Please see our disclosures on other charges.

Please see the terms of our referral program.

Please read important legal disclosures that apply to your relationship with Passfolio.