Over 91% of FX Liquidity in Nigeria Outside Formal Banking – ABCON Reveals
On June 26, 2025, the Association of Bureau de Change Operators of Nigeria (ABCON) dropped a bombshell: a whopping 91% of dollar liquidity in Nigeria exists outside the banking system. What does this mean, and why should you care? Let’s break it down.
Why People Are Hoarding Dollars
ABCON President Dr Aminu Gwadabe explains that rampant inflation and naira volatility have pushed Nigerians to stash dollars at home instead of parking them in banks. And with the naira hovering around ₦1,600/$1, many are waiting for cheaper rates before selling, a behaviour that artificially reduces dollar supply in official channels.
FX Illiquidity: A Systemic Risk
Despite reporting over $25 billion in diaspora remittances and close to $6 billion in official inflows, the official FX window remains starved. ABCON argues that a proper collaboration with the CBN could unlock this “hanging fruit” of liquidity. In short, there’s plenty of cash in the system, it’s just not flowing where it’s needed.
Global Comparisons: Learn Something
Dr Gwadabe pointed to nations like India, UAE, China, Lebanon, and Pakistan, where remittance liquidity is efficiently mobilized for investment. Nigeria’s FX gap isn’t due to lack of dollars, it’s a distribution problem and policy blind spot.
Economic Consequences
- Forex shortages spike import costs, stoking inflation across food, fuel, and medicine.
- Businesses face FX rationing, leading to slowed expansion or production cuts.
- Black-market FX premiums widen, eroding investor confidence and reducing official inflows.
Policy Fixes: How Nation Can Rebalance
- CBN–ABCON partnership: Create channels for BDCs to repatriate hoarded dollars.
- Regulatory tweaks: Friendly policies to bring informal liquidity into focus.
- Incentive models: Reward remittance inflows with favourable rates or access.
ABCON has offered to bring its expertise to the table, if the CBN signals openness. It’s a workable plan, but only if trust and clear frameworks follow.
Financial Juggernut Insight
Nigeria isn’t short on dollar inflows, it’s short on flow-through. Most of the market acts like there’s a drought, while oceans of cash sit in private hands. A smarter FX strategy could steady the naira, lower inflation, and support growth.
Yet, doing so demands bold regulatory changes and a clear roadmap for how BDCs interface with the CBN.
Bottom Line
Until that synergy is unlocked, the naira remains under pressure, inflation keeps climbing, and the real economy suffers. FX stability isn’t just monetary, it’s a bedrock for imports, jobs, and investor trust. Nigeria sits on a solution, but it needs to right policies and unlock the cash hidden in plain sight.