Nigeria's central bank ends dollar sales

Nigeria has several exchange rates operating in parallel, a system put in place during a 2016 oil price crash.

02 August 2021 | Economics

It is a huge haemorrhage on our scarce foreign exchange reserves and it cannot continue,

CHIJIOKE OHUOCHA AND LIBBY GEORGE

Nigeria's central bank is halting dollar sales to exchange bureaus, saying they have become channels for graft and illicit flows of money.

"It is a huge haemorrhage on our scarce foreign exchange reserves and it cannot continue," the bank's governor, Godwin Emefiele, said.

The decision by the central bank, which held the benchmark lending rate at 11.5% for the fifth time in succession, follows World Bank pressure on Nigeria to provide a clearer foreign exchange management system and converge its multiple exchange rates.

Nigeria has several exchange rates operating in parallel, a system put in place during a 2016 oil price crash because the government was seeking to avoid a large official devaluation of the naira as a matter of national pride.

Inflation has moderated after hitting multi-year highs this year because of the impact of the Covid-19 pandemic and falling oil prices, but foreign currency reserves remain under pressure.

Nigeria relies on oil for 90% of foreign exchange and another price crash last year severely limited its access to dollars.

The central bank has devalued the naira's official rate three times since the pandemic took hold early last year, and has limited dollar access for imports, but a wide gap between the official naira exchange rate and the parallel market has persisted.

Foreign exchange

An exchange bureau official who declined to be named said it had yet to receive a formal notification from the central bank.

Emefiele said the bank would channel more foreign exchange to commercial banks for consumers who had legitimate needs, and that it would no longer process or issue new licences for bureau de change operators.

"We will deal ruthlessly with the Nigerian banks who have collaborated with these illegal foreign exchange operators," he said.

Razia Khan, chief economist for Africa and the Middle East at Standard Chartered, said supplying more foreign exchange via other avenues would help, but would not necessarily solve the central bank's problems.

"The challenge in the interim will be to stop the emergence of a new parallel market," Khan said in an email. "Unless the supply of FX improves meaningfully, this is likely to remain a risk."

Emefiele also accused some international organisations and embassies of utilising illegal foreign exchange dealers to fund their local operations in "flagrant contravention of our foreign exchange laws and regulations in Nigeria."

The World Bank has said economic growth has resumed in Nigeria after the Covid-19 shock but is lagging the rest of sub-Saharan Africa, with food inflation, heightened insecurity and stalled reforms increasing poverty. -Nampa/Reuters

Similar News

 

National Consumer Protection Policy launched

19 hours ago | Economics

PHILLEPUS UUSIKUThe National Consumer Protection Policy 2020-2025 and the Namibia GS1 License was launched on Wednesday in Windhoek.According to the Minister of Industrialisation, Trade and...

Marketing Namibia as an investment destination

19 hours ago | Economics

PHILLEPUS UUSIKUThe ease of doing business, quality of roads and infrastructure, political and economic stability, good governance and judiciary independence are some of the factors...

Economy crawls into the green

19 hours ago | Economics

Jo-Maré Duddy WINDHOEKNamibia’s economy grew by 1.6% for the three months ended 30 June, the first positive year-on-year quarterly growth since the...

Nigeria aims to boost oil output

19 hours ago | Economics

Nigeria said Wednesday it aims to produce 1.88 million barrels per day of crude oil next year and the budget will be based on the...

Submissions open for Hollard Sport Awards

19 hours ago | Economics

STAFF REPORTERLockdown and the limitations on gatherings and events have driven those in the sports marketing and promotional space to have to adapt, digitise, dig...

GIPF applauded for fighting Covid-19

19 hours ago | Economics

STAFF REPORTERThe Government Institutions Pension Fund (GIPF) is proud to announce its contribution towards the fight against Covid-19 through an investment into FabuPharm (Pty) Ltd....

Economic growth positive in second quarter

1 day - 23 September 2021 | Economics

Jo-Maré Duddy – Namibia’s economy in the second quarter grew by 1.6% on annual basis, recovering from -6.7% the previous quarter and -11.6% in the...

Environment providing a good buying opportunity

1 day - 23 September 2021 | Economics

PHILLEPUS UUSIKUDespite interest rates being at record lows and providing a good buying opportunity, economic challenges faced by consumers and low confidence in future economic...

British employers offer more signing bonuses

1 day - 23 September 2021 | Economics

Some British employers are offering more signing bonuses to tackle labour shortages and overcome hiring bottlenecks, data from Indeed Hiring Lab’s quarterly report showed on...

UK inflation expectations jump in September

1 day - 23 September 2021 | Economics

The British public's expectations for inflation over the next year and over the longer-term jumped this month, raising the risk that the Bank of England...

Latest News

Marketing Namibia as an investment...

19 hours ago | Economics

PHILLEPUS UUSIKUThe ease of doing business, quality of roads and infrastructure, political and economic stability, good governance and judiciary independence are some of the factors...

Forklifting failure

19 hours ago | Others

Natasja ByleveldAre you OK thinking about unconventional ideas that could uplift society and norms to a higher standard? Do you like a challenge, or do...

Big thinker who is not...

19 hours ago | People

Contrasting with his considered, analytical, and steady approach to life, Rolf Mendelsohn is an undisputed adventurer. Together with the other founders of Paratus, Rolf...

Children abused as govt turns...

19 hours ago | Police

JEMIMA BEUKES WINDHOEKStaff at a centre for orphans and vulnerable people in Katutura...

Economy crawls into the green

19 hours ago | Economics

Jo-Maré Duddy WINDHOEKNamibia’s economy grew by 1.6% for the three months ended 30 June, the first positive year-on-year quarterly growth since the...

Oxygen giant spreads misinformation in...

19 hours ago | Health

MADLEN DAVIES and TUYEIMO HAIDULA LONDON/OSHAKATI One of the world’s biggest industrial gas companies spread misinformation in an attempt to stop...

Nigeria aims to boost oil...

19 hours ago | Economics

Nigeria said Wednesday it aims to produce 1.88 million barrels per day of crude oil next year and the budget will be based on the...

Submissions open for Hollard Sport...

19 hours ago | Economics

STAFF REPORTERLockdown and the limitations on gatherings and events have driven those in the sports marketing and promotional space to have to adapt, digitise, dig...

An easy ride-hailing platform

19 hours ago | Others

Wetumwene Shikage The everyday experience for many Namibians of getting a taxi to from different locations has been made more convenient. TaxiConnect provides an easy...

Load More