Nigeria is currently facing a chronic shortage of dollars. Rising demand has also put pressure on Nigeria’s naira. This is because foreign exchange providers, such as offshore investors exited, after the COVID-19 pandemic that triggered an oil price crash, and they are now faced with a constant supply of currency.
In a circular dated February 25, the central bank stated that it would pay exporters 65 naira ($0.16) for every dollar repatriated through official channels and sold into the currency market. It will also pay 35 naira to repatriate funds for other purposes.
According to the central bank, Nigeria hopes to earn $200 billion per year in foreign currency from non-oil exports by 2020.
It stated that the “race to $200 billion” programme was introduced by the Central Bank of Nigeria to decrease exposure to volatile foreign exchange sources and increase stability and sustained inflows of FX.
The central bank announced that Nigeria exports oil and cocoa to the global market in dollars, but imports petrol at a higher price.
Sometimes, exporters sell their profits on the unofficial marketplace where the dollar trades at a premium against the naira. Or they keep funds abroad. This is something the central bank would like to change.
The bank offered 5 naira for each dollar imported through licensed channels to recipients of remittances sent from Nigeria. Later, the bank extended the offer indefinitely, stating that remittances had increased fivefold.
After oil exports from Nigeria, Africa’s largest economy, remittances and money transfers are the second-largest source of foreign currency receipts.
($1 = 415.39 naira)
