Economy
Nigeria’s Current Sources of FX Inflows Unreliable—Emefiele
By Aduragbemi Omiyale
Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, has expressed worry over the sources of foreign exchange (FX) inflows in Nigeria, describing them as unreliable as they are prone to external forces, which hurt the nation’s economy.
Nigeria, the largest economy in Africa, has struggled to strengthen its legal tender, the Naira, in the forex market due to a shortage of foreign currencies to meet the demand of end-users.
Despite the prices of crude oil rising on the global market, the country’s external reserves have continued to deplete because the apex bank dips its hands into the purse to defend the local currency in the FX market.
Nigeria relies on crude oil sales to earn forex but it has not been able to take advantage of the recent rise in the price of the commodity as well as the war in Ukraine instigated by Russia.
A few months ago, the CBN, in an effort to change the narrative, launched an initiative called CBN RT 200 aimed at generating $200 billion from non-oil exports in the coming years.
The central bank was in Lagos on Thursday for a Non-Oil Export Summit and the CBN chief stated that country’s foreign exchange challenges were beyond the powers of monetary policy, noting that efforts are being made to manage both the demand and supply side to meet forex obligations.
Attributing the current challenges of the Nigerian economy to a combination of local and global factors such as the COVID-19 pandemic, delays in global logistic value chains and local security challenges, he expressed concern that most of Nigeria’s current sources of FX inflows were unreliable and prone to fluctuations of global economic developments.
Mr Emefiele noted that the global economic challenges had impacted food production among others and had exerted undue pressure on the economy, thereby exposing the fragility of the Nigerian economy and making macroeconomic management very difficult.
“These problems call for urgent design and steadfast implementation of other supportive, structural, and complementary policies that are broad-based, coordinated and focused on complementing the work of the monetary authority,” he noted.
Reiterating the need for a more diversified economy, Mr Emefiele said Nigeria could be great without crude oil, the global price of which the country had no control over.
He, therefore, urged all stakeholders to regroup by working together to reposition Nigeria on a growth trajectory by taking diversification of the economy much more seriously, emphasising that Nigeria had very little choice left but to look inwards and find innovative solutions to its challenges.
In order to avoid sudden adjustments to Nigeria’s economic life, he said there was the need to focus on strategies that can help the country earn more stable and sustainable inflows of foreign exchange.
“We would need to follow the best practices of other countries and ensure that we protect ourselves a little bit from factors that are beyond our immediate control. This is the time to start working in synergy for the good of our nation.
“This is the time for us as a Banking Community to do more and support exporters who have been flying the flag of Nigeria in the international market space,” Mr Emefiele declared.
Although he admitted the enormity of the ultimate goal of $200 billion in non-oil exports over the medium term, Mr Emefiele expressed confidence that the goal was attainable, given the fact that many countries less endowed than Nigeria had achieved much in the field of agriculture.
To underscore his point, he said within a short period of implementing the Non-Oil FX Rebate Scheme, the country had recorded a significant increase in non-oil export repatriation, adding that eligible exporters had been paid over N3.5 billion in rebates.
In his remarks, the Governor of Lagos State, Mr Babajide Sanwo-Olu, lauded the CBN and other actors in the banking sector for supporting the efforts by the Federal Government and states, especially Lagos, to boost growth in the economy.
Mr Sanwo-Olu expressed optimism that the Lekki Deep Seaport, which he described as the largest in West Africa, will be handed over for use at the end of 2022, thereby providing enormous opportunities to exporters to ply their trade and by extension improve the export earnings of the country.
As part of efforts to decongest the Apapa and Tin Can Island Ports in Lagos, the Governor said the state government was awaiting approval for work to begin on the Badagry Ports in the Western part of Lagos.
By Adedapo Adesanya
The Naira further depreciated against the United States Dollar by N3.46 or 0.25 per cent to N1,362.21/$1 from N1,358.75/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, June 5.
However, it appreciated against the Pound Sterling in the same market window during the session by N4.47 to trade at N1,823.59/£1 compared with the previous day’s N1,828.06/£1, and gained N7.00 against the Euro to sell at N1,574.58/€1, in contrast to Thursday’s closing price of N1,581.58/€1.
For another trading session, the Nigerian Naira maintained stability against the Dollar in the parallel market and the GTBank forex counter on Friday at N1,375/$1 and N1,372/$1, respectively.
The Naira is expected to remain strong in the near term, backed by a rise in external reserves, which are nearing $50 billion, enhancing analysts’ confidence about its outlook in the second half of 2026.
Heightened global uncertainty has reduced the incentive for importers and corporates to demand FX, as cautious trade weighs on import needs. Analysts estimate a $40 billion net FX position for the year, a projection anchored in oil windfall gains.
As for the cryptocurrency market, prices remained depressed following a strong US jobs report that spurred markets to price in higher-for-longer interest rates, sending Treasury yields and the dollar up while hammering stocks, especially AI-related names. Crypto markets saw heavy leverage washouts with about $1.6 billion in positions liquidated over 24 hours.
Ethereum (ETH) gave up 4.9 per cent to trade at $1,584.68, Solana (SOL) fell by 3.3 per cent to $63.22, Bitcoin (BTC) crashed by 1.9 per cent to $61,333.23, Dogecoin (DOGE) slipped by 1.8 per cent to $0.0821, and Ripple (XRP) moderated by 1.8 per cent to $1.09.
Further, TRON (TRX) dropped 1.6 per cent to sell at $0.3197, Binance Coin (BNB) slumped by 1.0 per cent to $581.18, and Cardano (ADA) declined by 0.4 per cent to $0.1589, while the US Dollar Tether (USDT) gained 0.07 to sell at $0.9997, and US Dollar Coin (USDC) closed flat at $0.9998.
By Adedapo Adesanya
Crude oil prices fell on Friday as traders gained confidence that renewed conflict between the United States and Iran was growing less likely.
The price of Brent crude futures settled at $93.09 a barrel, down $1.94 or 2.04 per cent, and the US West Texas Intermediate (WTI) crude futures finished at $90.54 a barrel, down $2.50 or 2.69 per cent.
President Donald Trump said the US will win the conflict with Iran either “militarily or on paper,” referring to the fitful negotiations with the Iranian government, and he suggested he could meet with Iran’s reclusive supreme leader “if it was to make a deal.”
He also said he had no desire to meet with Iranian Supreme Leader Mojtaba Khamenei, who has not been seen since the outbreak of violence on February 28 and was reportedly seriously injured in US-Israeli air strikes. He, however, added that if the two sides reached a deal, it was possible the two leaders would meet.
Meanwhile, Hezbollah leader Naim Qassem rejected on Thursday a US-brokered agreement between Israel and the Lebanese government to halt the fighting. Iran has made a ceasefire in Lebanon a condition for any peace deal with America.
Oman said operations at Mina al Fahal port were unaffected after it was reported that oil loading had been suspended following an explosion near its mooring berths. Oman exports 800,000 to 900,000 barrels per day of crude from the terminal.
As the US-Iran war peace talks dragged on, traffic in the Strait of Hormuz, where a fifth of the world’s oil passes, remained limited. Gains have been capped by oil inventories lasting longer than expected, rerouted exports and falling demand.
The Organisation of the Petroleum Exporting Countries and its allies (OPEC) is sticking to its oil demand growth forecast of 1.2 million barrels per day for this year, its Secretary General Haitham Al Ghais said, despite the Middle East conflict and closure of the Strait of Hormuz.
OPEC crude output fell last month, hitting its lowest level in decades as the US blockade of Iran and disruption in the Persian Gulf continued to curb production.
Output from its 11 current members dropped by 1.22 million barrels per day to 16.33 million a day in May, with Iran accounting for more than half of the decline, according to a Bloomberg survey. That was the lowest in at least 37 years. The data excludes the United Arab Emirates, which left the organisation last month after six decades.
Key members of the OPEC+ are expected to nudge up targets by a modest 188,000 barrels again in July during a video conference on Sunday. The session is one of four online meetings OPEC and its allies are due to hold that day.
By Adedapo Adesanya
Crude production under the collective Organisation of the Petroleum Exporting Countries (OPEC ) fell in May to its lowest level in at least 37 years as the blockade of Iran by the United States and disruptions in the Persian Gulf, continued to limit output.
According to a Bloomberg survey released on Friday, output from the organisation’s 11 current members, including Nigeria, dropped by 1.22 million barrels per day to 16.33 million barrels per day last month.
Iran accounted for more than half of the decline. The data excludes the United Arab Emirates (UAE), which departed the cartel last month after six decades of membership.
War between a US-Israeli alliance and Iran has reduced oil supplies from the Middle East, largely closing the Strait of Hormuz waterway. Saudi Arabia, Iraq, the UAE and Kuwait have been forced to cut crude production. Iranian shipments face additional pressure following a US blockade of its ports imposed in mid-April.
Iranian output fell by 710,000 barrels per day to a five-year low of 2.34 million barrels per day in May, the survey showed. Central Command reported that US forces have redirected 127 commercial vessels to enforce the blockade of all maritime traffic entering and exiting Iranian ports.
Kuwait recorded the second-largest decline last month, with production falling by 310,000 barrels per day to 490,000 barrels per day, less than one-fifth of pre-war levels. Saudi Arabia, the group’s leader, saw output decrease by 240,000 barrels per day to 6.57 million barrels per day.
The production reductions have not prevented OPEC and its allies from raising quotas over recent months, continuing a year-long process of restoring output halted several years ago.
This comes ahead of a meeting scheduled to be held on Sunday, June 7, where a sub-group of seven members is expected to increase targets by 188,000 barrels again in July. The session is one of four online meetings OPEC and its partners plan to hold that day.
Delegates indicated the alliance has plans for two additional monthly quota increases in August and September. UAE output rose by 300,000 barrels per day to 2.44 million barrels per day in May, according to the survey.
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