Showing posts with label Finance. Show all posts
Showing posts with label Finance. Show all posts

Tuesday, June 11, 2024

Video - Nigerian businesses call for review of new currency trading guidelines

Operators argue the new regulation could drive many out of business after Nigeria’s Central Bank raised the minimum capital requirement for operators by over one thousand percent.


Tuesday, May 21, 2024

Nigeria central bank delivers third big interest rate hike of the year

Nigeria's central bank delivered another big interest rate hike on Tuesday, responding to a continued rise in inflation which hit a 28-year high in April.

Central Bank of Nigeria Governor Olayemi Cardoso said the bank's Monetary Policy Committee (MPC) was faced with a decision to either raise or hold rates while it observed the impact of previous hikes, but opted for an increase in the interests of price stability.

The Monetary Policy Rate was increased by 150 basis points (bps) to 26.25% (NGCBIR=ECI), the third rate increase this year after hikes of 200 bps in March and 400 bps in February.

"The balance of risks suggests further tightening of policy to build on the benefits from previous hikes," Cardoso told a news conference.

Economists had widely predicted another hike given soaring inflation and the highly volatile naira currency.

"A bold policy move was required to bring Nigeria's real rates closer to positive territory and halt the naira's decline," said Danny Greeff, an analyst at ETM Analytics.

Inflation reached 33.69% year-on-year in April (NGCPIY=ECI) - a level not seen since mid-1996 - spurred by the government slashing petrol and electricity subsidies and twice devaluing the naira since President Bola Tinubu took over last year.

The central bank has more work to do to rein in price pressures and there could be more rate hikes to come, analysts said.

The International Monetary Fund has welcomed the central bank's previous hikes and called for decisions to be data-driven.

Cardoso has pledged to curb inflation, support the naira and depart from the unorthodox policies of his predecessor who blurred the lines between monetary and fiscal policy with direct interventions to try to lift economic growth.

The government is also struggling to lift output from its crucial oil sector and keep a lid on rampant insecurity that has left swathes of the country outside its control.

The central bank's next rate-setting meeting is scheduled for July. 

By Chijioke Ohuocha, Elisha Bala-Gbogbo and Macdonald Dzirutwe, Reuters

Wednesday, May 15, 2024

Nigeria warns international schools against dollar fees

The government of Nigeria is threatening dire consequences for any international school registered in the country found charging fees in dollars or any other foreign currency.

The move aims to protect the local unit, the naira, from further erosion – a difficult few years with currency fluctuation that has affected the entire country.

The country’s Economic and Financial Crimes Commission says it is monitoring the more than 70 international schools across Nigeria, already accusing some of them of levying tuition fees in dollars.

Over the last few months the American International of Abuja has been embroiled in a row in which a former state governor in 2021 allegedly paid $845,000 to the school in tuition fees.

The allegations compelled the EFCC to intervene, asking the school to refund the money paid by former Kogi state governor Yahaya Bello – ten years’ school fees for his children to study at the institution.

Charging of fees in dollars and other international currencies by the international schools amounted to a criminal offence, warned the EFCC, and the ban was meant to stop the ‘dollarisation’ of the Nigerian economy.

“Everyone knows that it is illegal to charge in other denominations apart from the naira. Whether in Chinese or American currency, any transaction that is not denominated in naira in Nigeria, the EFCC is against it,” Ola Olukoyede, EFCC’s Chairman, said – adding that all financial transactions in the country must be made using the local unit.

The agency he revealed would clamp down on schools – and anyone else – charging foreign currencies, including hotels, some of the other institutions guilty of attempted ‘dollarisation’ of the economy. The move was meant to ensure that the naira remained Nigeria’s legal tender, he added.

Likening charging of fees in dollars to racketeering, he disclosed that as part of efforts to address the problem and stabilise the naira, which has constantly lost value since late 2022, a task force has been set up to crack down on the issue.

“The EFCC is working to ensure that those breaking the rules find their way back to the right path, so that the wrath of the law will not be on them,” the Chairman added.

The ban is extended to private universities, and the National Universities Commission (NUC) has reiterated that no tertiary institution was allowed to charge tuition fees in dollars – save for when institutions are dealing with international students, according to Executive Secretary Chris Maiyaki, citing the issue earlier in the year.

He cautioned that no law in the country allowed payment of tuition in foreign denominations, adding that alleged cases of dollarisation of tuition fees were under investigation.

In February, the EFCC summoned the proprietors of private universities and schools alleged to have been charging tuition in dollars as part of the agency’s efforts to address “forex racketeering”.

Charging in excess of $10,000 in tuition fees, international schools are popular among the Nigerian elite, due to the belief that the education curriculum they offer – such as the British system – boosts chances for studying in universities abroad.

Sustained devaluation of the naira has also left Nigerian students abroad struggling to pay their tuition fees on time, besides generally affecting the economy back home, compelling some foreign businesses to price their services in foreign currencies.

At least 41 of the 70 international schools in Nigeria are situated in the commercial capital Lagos.

By Maina Waruru, The Pie News

Thursday, May 9, 2024

Video - Central bank concerned of increased cash hoarding in Nigeria

New data by the apex bank shows that over 90 percent of currency in circulation is held outside the banking system. The pattern reflects a growing lack of confidence in the banking system and also seriously limits access to liquid cash. The cash hoarding could threaten Nigeria's financial stability and economic growth.


Related story: Video - Stock Exchange of Nigeria acquires stake in Ethiopia Securities Exchange


Tuesday, April 9, 2024

Video - Stock Exchange of Nigeria acquires stake in Ethiopia Securities Exchange

NGX, based in Lagos, and other institutional investors poured large sums of cash into the Ethiopian exchange during its recent capital-raising endeavor. This strategic move aligns with NGX's objectives to expand capital market activities in East Africa and foster cross-border investment flows across the continent.


Friday, April 5, 2024

Video - Detained Binance executive appears in court in Nigeria for tax, money laundry charges

One of the two executives from Binance, the world's largest cryptocurrency exchange, detained in Nigeria appeared in an Abuja court on Thursday to face tax evasion and money laundering charges.

Binance and two of its executives Tigran Gambaryan, a U.S. citizen and Binance's head of financial crime compliance, and Nadeem Anjarwalla, a British-Kenyan who is a regional manager for Africa, have been charged with four counts of tax evasion and with laundering over $35 million.

Gambaryan and Anjarwalla were detained on Feb. 26 in connection with a criminal investigation into Binance's activities in Nigeria when they arrived in the country. Anjarwalla escaped from custody and fled the country.

Gambaryan was served with the charges for the first time since his detention during his court appearance and did not take a plea. He will be formally arraigned for the money laundering and tax charges on April 8 and 19, respectively, when his plea will be taken.

Binance itself has not been charged by Nigeria's Economic and Financial Crimes Commission (EFCC), which has argued Gambaryan could face the charges on the exchange's behalf.

Gambaryan's lawyer Chukwuka Ikuazom objected, saying he was "neither a director, partner nor company secretary" and had no written instructions from Binance to face the charges on its behalf.

Ikuazom also argued that since Binance and Gambaryan were jointly charged, he could not take a plea until the exchange, the first defendant in the case, had been served, according to Nigerian law.

Binance, which was not represented in court and had no immediate comment, said on Wednesday that it respectfully requested that Gambaryan, who had no decision-making power in the company, was not held responsible while discussions are ongoing with the Nigerian government.

Gambaryan has asked a Nigerian court to release him.

Nigeria blamed Binance for its currency woes after cryptocurrency websites emerged as platforms of choice for trading the Nigerian naira currency, as the country grappled with chronic dollar shortages. 

By Camillus Eboh, Reuters 

Related stories: Detained Binance executives sue Nigeria's security adviser, anti-graft agency

Detained Binance executive escapes detention in Nigeria amidst probe

Video - Nigeria detains Binance executives

Thursday, March 28, 2024

Video - Central Bank of Nigeria raises monetary policy rate

The Central Bank of Nigeria raised its monetary policy rate to 25 percent from 23 percent to contain inflation. Inflation is presently above 30 percent, leaving millions of people in Africa's most populous nation struggling to meet their basic needs.


Related stories: Naira gains on spot market after central bank rate hike

Central Bank of Nigeria revokes licences of 4,173 exchange bureaus



Wednesday, March 27, 2024

Naira gains on spot market after central bank rate hike

Nigeria's naira rose to a five-week high against the dollar in intraday trading on Wednesday, a day after the central bank hiked interest rates to tame inflation and lifted restrictions on foreign investors participating in its fixed-income auctions.

The currency rose to 1,200 per dollar on the official market, LSEG data showed, strengthening above the parallel market levels at about 1,340.

Africa's largest economy has been grappling with dollar shortages that pushed its currency to a record low of 1,851 per dollar last month, though central bank Governor Olayemi Cardoso has said that dollar liquidity is improving.

Last week, Nigeria's central bank said it had cleared all of its verified foreign exchange backlog, part of its strategy to stabilise the naira and tame soaring inflation.

The central bank on Tuesday raised its monetary policy rate 200 basis points to 24.75% from 22.75%, a month after its largest hike in around 17 years.

The central bank paid 26.6% for the one-year Treasury bill at its last auction two weeks ago, but investors at Wednesday's auction expect yields to rise above secondary market quotes of around 22.75% for the one-year bill and around 20.6% for the benchmark 10-year note.

Goldman Sachs analysts Andrew Matheny and Bojosi Morule said the central bank's further rate hike and "the emphasis on improving monetary transmission mechanism by mopping up liquidity will help to rebuild policy credibility", boosting Treasury bill yields to about 28% to 29%.

In the past, lenders faced constraints in fulfilling foreign investors' bids as they incurred extra costs on settlement day if they borrowed from the central bank's discount window to pay for bills.

Foreign investors can now pre-fund their accounts and get naira at the prevailing exchange rate for the auctions, analysts said.

"With this policy mix and with more inflows likely, including a Eurobond, we remain constructive on the naira, with our forex strategists forecasting an appreciation to 1,200 versus the dollar over the next 12 months," Matheny and Morule wrote in a research note to clients on Wednesday.

The central bank hopes the auctions can attract sufficient foreign interest to boost dollar liquidity.
Tellimer economist Patrick Curran said that "while forex liquidity has improved, it is still well below pre-pandemic levels and a boost in dollar supply will be needed to support further naira appreciation." 

By Chijioke Ohuocha and Elisha Bala-Gbogbo, Reuters

Related story: Central Bank of Nigeria revokes licences of 4,173 exchange bureaus

Monday, March 25, 2024

Video - Manufacturing firms reporting challenges in Nigeria

Nigeria’s manufacturing sector continues to report sluggish growth, as more factories either shut down or become severely distressed. Analysts say their most pressing concerns include the country's poor infrastructure and difficulties getting access to foreign exchange to buy raw materials.


Related stories: Video - Nigerian companies close due to economic volatility

Video - Why Are Multinationals Like P&G, GSK and Sanofi Leaving Nigeria?



Detained Binance executive escapes detention in Nigeria amidst probe

 Nadeem Anjarwalla, one of the two Binance executives detained in Nigeria has reportedly escaped from lawful custody, according to sources.

These sources revealed that Anjarwalla, aged 38, escaped on Friday, March 22nd, from the Abuja guest house where he and his colleague were being detained, Premium Times reported.

Guards on duty escorted him to a nearby mosque for prayers as part of the ongoing Ramadan fast.

The British national, who also holds Kenyan citizenship, is believed to have departed Abuja via a Middle Eastern airline.

The circumstances surrounding how Anjarwalla managed to board an international flight despite being in custody and his British passport being held by Nigerian authorities remain unclear.

Authorities are reportedly working to uncover Anjarwalla's intended destination to apprehend him and return him to custody.

According to an Immigration official, the Binance executive fled Nigeria using a Kenyan passport. However, authorities are trying to ascertain how he acquired this passport, as he did not possess any other travel documents apart from his British passport when he was detained.

Before now, WIRED reported that Anjarwalla fell ill while in custody, possibly due to malaria, although the precise nature of his symptoms was unclear.

Nadeem Anjarwalla, Binance's regional manager for Africa, along with Tigran Gambaryan, Binance's head of financial crime compliance and a U.S. citizen had travelled to Nigeria after the country banned several cryptocurrency trading websites to halt what the CBN described as continuous manipulation of the forex market and illicit movement of funds.

Upon their arrival on February 26, they were arrested by the office of the National Security Adviser (NSA), and criminal charges were filed against the two executives.

Binance was instructed to provide the Economic and Financial Crimes Commission (EFCC) with detailed data and information regarding all Nigerian traders on its platform.

According to Yemi Cardoso, the governor of the Central Bank of Nigeria (CBN), over $26 billion passed through Binance Nigeria from unknown sources. The government even hit the exchange with a $10 billion fine amidst a crypto exchange probe.

On February 28, 2024, the court granted the EFCC an order to remand the duo for 14 days. Due to Binance’s refusal to comply with the order, the court extended the remand of the officials for an additional 14 days to prevent them from tampering with evidence. The court then adjourned the case till 4 April 2024.

By Adekunle Agbetiloye, Business Insider Africa

Related stories: Nigeria files tax evasion charges against Binance

Court in Nigeria Orders Binance to Relinquish Data of All Nigerians Trading on its Platform

Video - Nigeria detains Binance executives

Nigeria files tax evasion charges against Binance

Nigeria's tax agency has filed tax evasion charges against crypto platform Binance, it said in a statement on Monday.

The cased filed by the Federal Inland Revenue Service (FIRS) in Abuja accuses Binance of four counts of tax evasion.

Binance was not immediately available to comment.

The charges include non-payment of value-added tax (VAT), company income tax, failure to file tax returns, and complicity in aiding customers to evade taxes through its platform, the FIRS said.

By Camillus Eboh, Reuters

Related stories: Court in Nigeria Orders Binance to Relinquish Data of All Nigerians Trading on its Platform

Video - Nigeria detains Binance executives


Monday, March 4, 2024

Businesses in Nigeria turn to Moniepoint instead of traditional banks

Chidi Ebule keeps at least 10 payment machines on the check-out counter of his grocery store in Lagos, so his customers can use cards from any bank or fintech company they prefer. But in recent months, he has needed to use only one machine for most transactions: the one provided by local fintech major Moniepoint.

“I try to use another POS [point of sales] machine, [but customers] will say, ‘Please don’t put my card in that. Use Moniepoint,’” Ebule told Rest of World. “The customer knows there could be an issue when you use the other [terminals], and he does not have power over the bank.”

Moniepoint’s light-blue payment machines have become ubiquitous across Nigeria — from megastores in Lagos to roadside shops in Kano. Shoppers prefer it to other options because Moniepoint offers a lower-than-average transaction decline rate and instantly reverses transactions in case of failed payments. The Lagos-headquartered company, founded in 2015, has expanded its footprint across the length and breadth of Nigeria, and is now available across all 774 local governments in the country, according to its website.

“Merchants don’t care about lofty claims about financial inclusion. All they want is to see their transactions have gone through and get the instant payment alert,” Nchedolisa Akuma, senior fintech analyst at market intelligence firm Stears, told Rest of World. “Moniepoint appears to be quite intentional about market intelligence and gathering real-time market intel, which made them quite nimble.”

In 2023, Moniepoint reportedly recorded 5.2 billion transactions, worth over $150 billion. The same year, it ranked second in the Financial Times’ list of Africa’s fastest-growing companies. By January 2024, around 2.3 million businesses were using Moniepoint’s payment machines, a company representative told Rest of World. The bulk of Moniepoint’s earnings come from the transaction charges on its point-of-sales machines and its online payment gateway. It also has a microfinance bank license and offers business loans.

When it first launched, Moniepoint was named TeamApt, and built software for traditional banks. In 2019, it obtained a government license for agency banking — a model that allows companies to act as intermediaries between banks and their customers.

“We just felt that banks are not executing these things the right way, and can we get into this space and execute it right?” Tunde Olofin, managing director of Moniepoint’s banking arm, told Rest of World.

So far, Moniepoint has raised over $57 million from investors such as QED Investors, Quantum Capital Partners, and Global Ventures. The company’s growth is aided by its network of more than 600,000 on-the-ground “business managers,” who earn commissions for onboarding business owners to the platform and distributing the POS terminals, Olofin said.

In early 2023, when Nigeria experienced an acute cash crisis after the government changed the currency’s design, Moniepoint came to the rescue of many small businesses.

Oberry Agamah, who owns a phone accessories shop in Lagos, told Rest of World she started using Moniepoint’s payment machines during that time. The ones provided by other banks could not process transactions smoothly, she said, due to the pressure on the country’s banking infrastructure.

Before she began using the Moniepoint machines, Agamah’s business suffered: She struggled to process customers’ transactions, and had to deal with shoppers who bought goods and disappeared after making unsuccessful digital transfers.

“Before, receiving transfers in our normal accounts was hell — they wouldn’t go in time, and customers were going away with our money,” Agamah said. “The experience with Moniepoint is very nice, and it has made my business very easy in the aspect of receiving transfers, and I receive [them] very fast.”

Moniepoint’s systems are designed to expand based on the volume of transactions, Solomon Amadi, the company’s vice president of payment infrastructure, told Rest of World. “Many of the other players in the industry don’t have a lot of control over their core banking, [but] we do … and we have optimized that process well enough that the customer is priority,” he said.

In June 2023, Moniepoint’s closest rival in Nigeria was Chinese-owned fintech OPay — backed by SoftBank Vision Fund and Sequoia Capital China. OPay had a 37% share of the Nigerian point-of-sales agents network, according to the Nigerian Financial Services Report. Moniepoint came in second with a 20% share.

But Moniepoint is better placed than its rivals because of the bouquet of financial services it offers, Olaoluwa Oyedele, vice president of growth and product at Lagos-based fintech startup Earnipay, told Rest of World.

“Moniepoint has a couple of license categories that allow them to do different things,” Oyedele said. “They have a microfinance bank license which allows them to collect deposits, and a payment terminal service provider license which allows them to issue POS terminals. With these two license categories working hand-in-hand, they can target offline payment businesses or industries. That is where they have built a very impressive distribution network. The offline payment, for context, is the biggest payment opportunity in Nigeria.”

Moniepoint’s business managers — well-known members of local communities who serve as liaisons between the company and its users — are central to its growth, Edidiong Uwemakpan, vice president of communications, told Rest of World.

To build this network, “we studied a number of informal networks in the country … [including] the National Union of Road Transport Workers, churches, and people with branches everywhere,” Uwemakpan said. “How are these people able to collect money from everyone and balance their books? Because at the end of the day, what we were building were human branches across the country.”

The business managers don’t get a salary but receive a sign-up fee of 8,500 naira ($5.44), and monthly commissions on the transactions made through each POS terminal they manage.

“If you work hard and make enough people sign up for POS, you are in business, you are in money,” Fabusoye Tolu, a Moniepoint business manager, told Rest of World. “You earn commissions, and that is even far better than earning a salary because if you earn a salary, it will be capped at a particular figure. With commissions, your earnings do not have a limit.”

Tolu declined to disclose how much he earns from commissions, but said he often targets big businesses that generate high cash flow so that he can earn more at the end of the month.

By Ope Adetayo, rest of world

Related stories: Video - Nigeria caps foreign exchange position for banks

Central bank of Nigeria to replace policymakers as shakeup continues

Friday, March 1, 2024

Central Bank of Nigeria revokes licences of 4,173 exchange bureaus

Nigeria's central bank said on Friday it had revoked the licences of 4,173 exchange bureaus that failed to comply with its guidelines and directives, including rendering returns of transactions and payment of required renewal fees within the due period.

The central bank, which resumed dollar sales to exchange bureaus this week, outlawed street-trading of foreign exchange and raised minimum capital levels for exchange bureaus to at least 2 billion naira ($1.3 million) under new guidelines released on Feb. 23.

The moves are part of broader reforms to Nigeria's forex market which has been grappling with chronic foreign exchange shortages.

Central Bank of Nigeria (CBN) spokesperson Hakama Sidi Ali said the licences of the affected exchange bureaus were also revoked due to non-compliance with anti-money laundering and terrorism finance regulations.

"The CBN is revising the regulatory and supervisory guidelines for Bureau de Change operators. Compliance with the new requirements will be mandatory for all stakeholders in the sector when the revised guidelines become effective," Sidi Ali said in a central bank statement. 

By Elisha Bala-Gbogbo, Reuters

Related story: Video - Nigeria detains Binance executives


Wednesday, February 21, 2024

Video - Nigeria sees hundreds hit the streets over growing crisis

The protesters say they want immediate action from the government to help reduce the soaring cost of living in the country.


Related story: Protests in Nigeria over skyrocketing inflation as local currency hits record low value

Naira hits record lows, stocks sink



Nigeria plans clampdown on Binance, other crypto firms

The Nigerian government is considering blocking the online platforms of Binance and other crypto firms to avert what it considers continuous manipulation of the forex market and illicit movement of funds, officials with knowledge of the policy option have told PREMIUM TIMES.

The recent unprecedented weakening of the Nigerian currency has seen the naira falling to all-time low of N1,800 to a dollar in the parallel market.

Presidency and regulatory sources say the government decided to move against Binance and other crypto firms following reports that currency speculators and money launderers were using them to execute criminal activities. Authorities believe the ‘criminal activities’ going on on platforms are contributing significantly to the weakening of the naira.

Binance, a digital assets platform, serves as a window for peer to peer transaction allowing users to advertise interest to sell or buy currencies of their choice.

In September 2023, Nigeria’s Securities and Exchange Commission (SEC) placed a disclaimer on Binance Nigeria Limited, saying the platform was “neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal”.

Despite the warning by the regulatory agency, the firm continued its operation, attracting huge patronage especially among urban youths and suspected speculators and money launderers.

Aside suspicions of economic sabotage, officials also speak of national security concerns as the platforms are often patronised by other criminal groups including for payment of ransom.

Law enforcement sources say the digital asset platforms are also routinely deployed for manipulation of forex values through fake deals that serve to prop up values or cause a fall.

A source at the Economic and Financial Crimes Commission (EFCC) involved in probing criminal complaint against digital asset platforms, who was however not authorised to speak to the press, described the process as a “sophisticated heist against the Nigerian economy”.

According to her, by allowing simultaneous opening of buy and sell windows for a single user, manipulators often fake interest to sell dollars which they then buy at a speculated rate to themselves through the buy window.

“This therefore gives the dollar a fake value against the naira which then sets a frenzy and mislead the market. This fake price is then often quoted by BDCs who raise their prices to meet the Binance benchmark even without any corresponding demand in that segment,” she said.

A senior executive at the Central Bank of Nigeria (CBN) described as “troubling” the bearish downward trade of the naira against the dollar in the last 10 days, attributing it to artificial devaluation caused by the speculative sites.

“Through manipulative rent seeking, Binance’s global reach results in higher USD to NGN exchange rates often being used as a benchmark for currency trading, misleadingly devaluing the Naira in global markets.”

But he added that trading on the platform is encouraged by activities of money-launderers and terrorist financiers “who have no qualms with the arbitrage”.

“We started noticing this sharp trend from February 9, and since then it has caused significant devaluation of the naira against the USD. This is simply criminal,” he said.

Binance has had similar accusations of currency manipulation and unethical conduct leading to sanctions in many countries and an ongoing lawsuit in the United States.

If the government decides to invoke a ban on the digital asset trading site it would be treading the path of countries like Malaysia, France and Malta, among others.

The Office of the National Security Adviser (ONSA) had announced Tuesday that it was joining forces with the Central Bank of Nigeria to clamp down on currency speculators and economic saboteurs.

The Head of Strategic Communication at ONSA, Zakari Mijinyawa, hinted in his Tuesday statement that individuals and organisations involved in wrongful activities in Nigeria’s Forex market would be identified, investigated and penalised.

Contacted on Thursday night on the planned clampdown on Binance and other crypto firms, Mr Mijinyawa said he was at an “important meeting”. He did not answer or return subsequent calls made to him.

Binance could not be reached Wednesday morning. Multiple calls to a customer service number listed for it rang out unanswered.

By Abdulrahman Abdulmalik, Premium Times

Related story: Video - Central Bank of Nigeria gives guidelines on cryptocurrency

Tuesday, February 20, 2024

Protests in Nigeria over skyrocketing inflation as local currency hits record low value

Nigerians are facing one of the West African nation’s worst economic crises in years triggered by surging inflation, the result of monetary policies that have pushed the currency to an all-time low against the dollar. The situation has provoked anger and protests across the country.

The latest government statistics released Thursday showed the inflation rate in January rose to 29.9%, its highest since 1996, mainly driven by food and non-alcoholic beverages. Nigeria's currency, the naira, further plummeted to 1,524 to $1 on Friday, reflecting a 230% loss of value in the last year.

"My family is now living one day at a time (and) trusting God," said trader Idris Ahmed, whose sales at a clothing store in Nigeria’s capital of Abuja have declined from an average of $46 daily to $16.

The plummeting currency worsens an already bad situation, further eroding incomes and savings. It squeezes millions of Nigerians already struggling with hardship due to government reforms including the removal of gas subsidies that resulted in gas prices tripling.


With a population of more than 210 million people, Nigeria is not just Africa’s most populous country but also the continent’s largest economy. Its gross domestic product is driven mainly by services such as information technology and banking, followed by manufacturing and processing businesses and then agriculture.

The challenge is that the economy is far from sufficient for Nigeria’s booming population, relying heavily on imports to meet the daily needs of its citizens from cars to cutlery. So it is easily affected by external shocks such as the parallel foreign exchange market that determines the price of goods and services.

Nigeria's economy is heavily dependent on crude oil, its largest foreign exchange earner. When crude prices plunged in 2014, authorities used its scarce foreign reserves to try to stabilize the naira amid multiple exchange rates. The government also shut down the land borders to encourage local production and limited access to the dollar for importers of certain items.

The measures, however, further destabilized the naira by facilitating a booming parallel market for the dollar. Crude oil sales that boost foreign exchange earnings have also dropped because of chronic theft and pipeline vandalism.


Shortly after taking the reins of power in May last year, President Bola Tinubu took bold steps to fix the ailing economy and attract investors. He announced the end of costly decadeslong gas subsidies, which the government said were no longer sustainable. Meanwhile, the country's multiple exchange rates were unified to allow market forces to determine the rate of the local naira against the dollar, which in effect devalued the currency.

Analysts say there were no adequate measures to contain the shocks that were bound to come as a result of reforms including the provision of a subsidized transportation system and an immediate increase in wages.

So the more than 200% increase in gas prices caused by the end of the gas subsidy started to have a knock-on effect on everything else, especially because locals rely heavily on gas-powered generators to light their households and run their businesses.


Under the previous leadership of the Central Bank of Nigeria, policymakers tightly controlled the rate of the naira against the dollar, thereby forcing individuals and businesses in need of dollars to head to the black market, where the currency was trading at a much lower rate.

There was also a huge backlog of accumulated foreign exchange demand on the official market — estimated to be $7 billion — due in part to limited dollar flows as foreign investments into Nigeria and the country’s sale of crude oil have declined.

Authorities said a unified exchange rate would mean easier access to the dollar, thereby encouraging foreign investors and stabilizing the naira. But that has yet to happen because inflows have been poor. Instead, the naira has further weakened as it continues to depreciate against the dollar.


CBN Gov. Olayemi Cardoso has said the bank has cleared $2.5 billion of the foreign exchange backlog out of the $7 billion that had been outstanding. The bank, however, found that $2.4 billion of that backlog were false claims that it would not clear, Cardoso said, leaving a balance of about $2.2 billion, which he said will be cleared "soon."

Tinubu, meanwhile, has directed the release of food items such as cereals from government reserves among other palliatives to help cushion the effect of the hardship. The government has also said it plans to set up a commodity board to help regulate the soaring prices of goods and services.

On Thursday, the Nigerian leader met with state governors to deliberate on the economic crisis, part of which he blamed on the large-scale hoarding of food in some warehouses.

"We must ensure that speculators, hoarders and rent seekers are not allowed to sabotage our efforts in ensuring the wide availability of food to all Nigerians," Tinubu said.

By Friday morning, local media were reporting that stores were being sealed for hoarding and charging unfair prices.


The situation is at its worst in conflict zones in northern Nigeria, where farming communities are no longer able to cultivate what they eat as they are forced to flee violence. Pockets of protests have broken out in past weeks but security forces have been quick to impede them, even making arrests in some cases.

In the economic hub of Lagos and other major cities, there are fewer cars and more legs on the roads as commuters are forced to trek to work. The prices of everything from food to household items increase daily.

"Even to eat now is a problem," said Ahmed in Abuja. "But what can we do?"


Related stories: Naira hits record lows, stocks sink

Nigeria's latest devaluation may be 'turning point' in currency reform drive

Authorities in Nigeria Voice Worry as Rising Cost of Living Sparks Protests

Monday, February 19, 2024

Naira hits record lows, stocks sink

The Nigerian naira fell to record lows on both the official and unofficial markets on Monday, while stocks posted their biggest one-day fall in more than a year, as jittery investors sold off local assets.

The currency dropped to 1,712 naira per dollar in late trades on the official market and to around the same level on the unofficial market after extending losses.

Africa's largest economy has been experiencing crippling dollar shortages that have pushed its currency to record lows, though central bank Governor Olayemi Cardoso has said that foreign exchange liquidity is improving.

The latest fall on the currency and stock markets comes after data showed on Thursday that the country's inflation rate had accelerated further in January, reaching almost 30% in annual terms, driven by soaring food costs.

"Without policy moves in sight to rein in inflation, the naira will continue to devalue simply on a purchasing power basis. There are also risks that it could further deter foreign investors, given the increasingly negative real yield found in Nigerian debt securities," said Kyle Chapman, FX markets analyst at London-based Ballinger & Co.

Stocks on Nigeria's All-Share Index fell 3.15% on Monday after banking, consumer goods and industrial shares dropped, to post their single biggest fall since Oct. 2022.

Heavyweight Dangote Cement and MTN each fell the maximum 10% allowed on the bourse, to help drag the index to 102,395.21 points.

Stocks had been acting as a hedge against inflation for investors.

Cardoso has hiked open market rates to draw investors to bills which had lost their shine to equities as inflation climbed, but treasury rates still lag the benchmark policy rate and the fall in the naira means yields would have to rise further. 

By Chijioke Ohuocha, Reuters

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Thursday, February 15, 2024

Nigeria to clear debt, fix gas shortages in plan to end power woes

Nigeria plans to fix its chronic power woes by settling outstanding debts of about $2.16 billion to energy producers and tackling gas supply shortages to generating firms, the power minister said on Wednesday.

Africa's largest economy has 12,500 megawatts of installed capacity but only produces about a quarter of that, forcing households and businesses, including manufacturers to resort to diesel and petrol generators.

Power Minister Adebayo Adelabu told reporters on Wednesday that outstanding debts, inadequate gas supplies and ageing equipment were the key barriers hampering optimal power output.

Adelabu said power generators are currently owed 1.3 trillion naira ($858.65 million), in addition to a $1.3 billion legacy debt from a decade ago.

"Part of preparation to turn around and transform the sector is the settlement of existing outstanding debt obligations to the gas supply and power generation companies using partly cash payments and guaranteed debt instruments," he said.

Last week, Adebalu proposed a naira payment for gas sales to power plants as a solution to solve dollar shortages as costs are expected to balloon after a second currency devaluation in less than a year.

Natural gas is sold in dollars to power plants because investments tied to building gas processors and pipelines are priced and paid for in dollars.

Grid power is erratic in Nigeria, Africa's most populous nation. The grid collapsed on Feb. 4, causing a national blackout, and at least three times in 2023, which authorities blamed on technical problems. 

By Camillus Eboh, Reuters 

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Monday, February 12, 2024

Nigerian bank CEO, family among the 6 killed in California helicopter crash

The CEO of one of Nigeria's largest banks was among the six people killed when the helicopter they were on crashed Friday night in California, a World Trade Organization official said.

The chartered helicopter departed Palm Springs at 8:45 p.m. en route to Boulder City, Nevada, but "impacted the ground" near Halloran Springs, California, at 10:08 p.m., National Transportation Safety Board member Michael Graham said at a news conference Saturday night.

All six people on board — the pilot-in-command, a safety pilot and four passengers — were killed, Graham said.

Authorities have not publicly identified the victims.

Ngozi Okonjo-Iweala, the director general of the World Trade Organization, said in a post on X that Herbert Wigwe, the group CEO of the Lagos-based Access Bank, was on board the helicopter with his wife and son. She did not include the names of Wigwe’s wife and son.

A fourth passenger, Bimbo Ogunbanjo, also known as Abimbola Ogunbanjo, was among the dead, she said. He is the former chair of NGX Group, the Nigerian stock exchange.

Graham said the aircraft, an Airbus Helicopters H130, was operated and chartered by Orbic Air. The California-based company did not immediately respond to a request for comment.

Multiple motorists on nearby Interstate 15, which runs from near the U.S.-Mexico border to Las Vegas en route to Canada, reported seeing either the crash or its resulting fire Friday night, he said.

"There was fire when the aircraft did contact the terrain," Graham said, citing witness accounts.

Halloran Springs, the name for a natural springs site in the Mojave Desert and its surrounding community, is about 80 miles south of Las Vegas, where the Super Bowl between the San Francisco 49ers and the Kansas City Chiefs is set to be held Sunday.

Boulder Springs is about 25 miles outside Las Vegas.


Friday, February 9, 2024

Nigeria to propose naira payment for local gas sale

Nigeria is proposing for gas producers to sell gas to local power plants in naira to solve problems of dollar shortages after a second currency devaluation in less than a year is expected to balloon costs and make it hard for firms to pay.

Nigeria has 24 gas power plants with a combined output capacity of 11,434 megawatts, but it only delivers around a third of its capacity to the grid due to issues with gas supply.

"Proposing domestic gas payment in naira is a key step toward stability, aligning with our economy's needs and promoting sustainable energy production," Power Minister Adebayo Adelabu said in a post on X.

Adelabu added that he plans to create legislative measures that will mandate naira payments for domestic gas supply.

Natural gas is sold in dollars to power plants because investments tied to building gas plants and pipelines are priced and paid for in dollars.

However, local operators have had difficulties making dollar payments since a currency crisis which has seen the naira lose significant value. The currency weakness is expected to force the price of gas in the domestic market sharply higher.

Nigeria has proven gas reserves of 206 trillion cubic feet which it has struggled to tap due to capital constraints. The government hopes it can fix the challenges by switching to naira payments and capping dollar prices.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the local gas regulator, has asked producers to keep gas prices at $2.18 per million British Thermal Units (MMBtu) as per agreement with unions three-years ago. 

By Isaac Anyaogu, Reuters

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