The Manufacturers Association of Nigeria (MAN) said that its members were finding it very difficult to access U.S dollars for their business transactions, a recent report by Nairametrics revealed.
“It was pretty difficult to source forex from all the available windows. Members have had problems accessing foreign currencies for five weeks due to lack of Central Bank’s interventions,” the manufacturers’ group said.
This was corroborated by investment banking firm, FBNQuest in a note on May 7, when it said: “There is an estimated $1bn backlog of unmet dollar demand.”
Nigeria depends on crude oil exports for most of its revenue and more than 90% of its foreign exchange earnings. Despite a recent rally in oil prices, Nigeria’s forex situation remains bleak as businesses find it difficult to access forex.
“The scarcity of foreign-dominated currencies is hampering the ability of local manufacturers to import raw materials, machines, and spares that are available in Nigeria,” MAN said.
According to the group, Nigeria’s central bank needs to prioritise improved access to foreign exchange for operators in the real sector to allow them to acquire the necessary tools in reactivating the economy.
Some businesses tracked by Nairametrics also buttress Bloomberg’s report. One factory owner who preferred to remain anonymous inform us that they have been looking to buy $4m for weeks but have only been able to source $1m. “We consider ourself lucky despite only being able to get 25% of what we want” he remarked.
Forex at the black market range from N420 to N470 for wired transfers depending on who is selling and buying respectively. The black market is yet to settle for any price discovery due to the asymmetrical nature of the supply demand dynamics.
The Forex market recently depreciated the exchange rate between the naira and the dollar with the 5 year non-deliverable forwards falling to N570/$1 from N413/$1.