The naira fell to an all-time low of N436 to the dollar on the parallel market yesterday, as against N428 to the dollar from the previous day, as the perennial scarcity of the greenback in the market took a turn for the worse.
The effect of the dollar shortage was also felt on the interbank FX market where the spot rate of the naira also depreciated to N313.07 to the dollar thursday, from N310.08 to a dollar the previous day.
This is just as Nigeria’s external reserves fell further to $24.759 billion as of September 21, 2016.
The situation on the parallel market was attributed to the refusal by banks to sell dollars to Bureau de Change (BDC) operators.
The President, Association of Bureau de Change Operators of Nigeria (ABCON), Mr. Aminu Gwadabe, said none of his members were able to access dollars from banks as directed by the Central Bank of Nigeria (CBN).
“As I speak to you, no BDC has been able to access FX since Monday. It is very unfortunate that the liquidity in the market has dried up. That is too bad for the market,” the ABCON boss said in a phone chat with THISDAY.
The central bank had directed agent banks to approve international money transfer operators to sell foreign currency accruing from inward money remittances to licensed BDCs.
Gwadabe, however, was optimistic that a yet-to-be-announced initiative between his association and Travelex would in the medium term help bridge the liquidity gap in the market.
The initiative may see Travelex, a licensed forex dealer, sell dollars directly to BDCs in the country.
The CBN Governor, Mr. Godwin Emefiele, on Tuesday expressed regrets that BDCs were not getting enough dollars and said the central bank would revisit the existing mechanism to ensure that dollars flowed directly to the currency dealers.
“I must again say that it’s regrettable that what we did was to see how the dollars from international money transfer operators could flow to the BDCs and from them to people who want to buy foreign exchange through the BDCs at the limit of not more than $5,000.
“We have reviewed the report and the management of the CBN is looking at various options on how to ensure that these funds flow directly to the BDCs so that we can moderate the prices in that market.
“If need be, we would change the existing mechanism that would ensure that these dollars flow directly to the BDCs. However, I would like to appeal that whenever you see that some banks or bank officials are collecting brokerage fees in order to sell FX to the BDCs, I plead with you to provide us with credible information,” he said.
Dangote: Nigeria Needs $15bn
But as the FX crisis bites harder, Nigerian industrialist and Africa’s richest man, Alhaji Aliko Dangote, has said Nigeria would need $15 billion from assets sales and borrowing to revive her slumping economy and boost foreign reserves.
“Through sales of assets, through loans from the Bank of China or wherever, we need something like $15 billion,” Dangote said in a Bloomberg TV interview at the U.S.-Africa Business Forum in New York on Wednesday.
“We’re having a problem as the reserves are low. The banks, entrepreneurs, everybody is speculating on the currency.”
The Nigerian economy, battered by low oil prices and a dearth of foreign investment, is set to shrink in 2016 for the first time in 25 years, according to the International Monetary Fund (IMF), which forecasts a 1.8 per cent contraction.
President Muhammadu Buhari’s government is trying to spend a record budget of N6.1 trillion ($19.4 billion) to stimulate growth. The country plans to raise about $4.5 billion of concessional loans and Eurobonds this year to help pay for its spending plans.
Buhari, who came to power in May 2015, is making good on his promise to tackle corruption, said Dangote, who is worth $10.9 billion, according to Bloomberg Billionaires Index.
The businessman, whose money is mostly tied up in Dangote Cement Plc, has lost $4.4 billion since the end of 2015, the fourth-most globally among billionaires, due in large part to the naira’s depreciation.
“President Buhari is doing a great job in terms of fighting corruption,” he said, without citing specific examples of the progress. “Corruption has gone down dramatically.”
Nigeria ranks among the world’s 40 most corrupt countries, according to Transparency International, the Berlin-based anti-graft body.
Lagos, Kaduna Lead Debtor States
Meanwhile, new data released by the Debt Management Office (DMO) has shown that Lagos, Kaduna and Edo States are the most indebted states in the country, with a combined debt profile of $1.84 billion.
According to the data released by DMO on Wednesday, the 36 states of the federation and the Federal Capital Territory (FCT) owe $3.65 billion in foreign debts as against the $7.61 billion owed by the federal government as of June 30, 2016, bringing the country’s total foreign debt to $11.26 billion, reported the News Agency of Nigeria (NAN).
Lagos, which is the nation’s commercial hub, retained its topmost position as the most indebted state in the country, with a total of $1.43 billion in foreign debts, representing 39.17 per cent of the country’s total subnational foreign debt.
Kaduna State, with total foreign debt of $225.28 million comes in the second position, accounting for 6.16 per cent of the subnational foreign debt.
Edo State with $179.52 million as of June 30 accounts for 4.91 per cent of the country’s subnational foreign debt.
Other states with subnational foreign debts include Cross River – $141.47m or 3.87 per cent; Ogun – $103.55m or 2.83 per cent. Bauchi – $97.23m or 2.66 per cent; Osun – $78.93m or 2.16 per cent; Adamawa – $77.14m or 2.11 per cent; Enugu – $74.46m or 2.04 per cent; Katsina – $68.99m or 1.89 per cent; and Oyo – $67.56m or 1.85 per cent.
Some of the least indebted states are Borno – $21.89m; Taraba – $23.01m; Plateau – $29.24m; Yobe – $29.28m; Jigawa – $32.62m; Kogi – $33.56m; Benue – $34.26; FCT – $34.8m; Zamfara – $35.07m; and Delta – $42.21m. The external debt of the subnational governments as of December 31, 2010 stood at $2 billion. However, by December 2015, it had risen to $3.37 billion.
