Economy

Naira Shortage Threatens Nigerian Businesses—Report

Published

9 years ago

23/09/2017

By Modupe Gbadeyanka

A report published by Bloomberg has revealed that Nigerian businesses are now battling with shortage of Naira, after overcoming the worry of getting Dollar to carry out their operations.

The article titled ‘Unintended Result of Nigerian Dollar Hunt Is Naira Shortage’ and published on Thursday, September 21, 2017, stated that a central bank requirement that companies back forward dollar purchases with naira is drying up supplies, helping to underpin a 2.1 percent gain since the local currency fell to a record low against the greenback on Aug. 9.

At the same time, an increase in government borrowing is spurring banks to invest in the safety of sovereign debt rather than lending to businesses or consumers, also draining cash out of the system.

Some banks demand naira deposits of as much as 1.5 times the amount of dollars sought in the 60-day forwards market to guard against fluctuations in the currency, said Ayodeji Aboderin, chief financial officer for May & Baker Nigeria Plc, a Lagos-based pharmaceutical and food processing company. That is pressuring the company’s own cash flow, he said. The difference is returned to the company on the delivery of the contracts, with the amount depending on how the currencies have moved.

“Money you would have used as working capital will be taken upfront by the bank,’’ Aboderin said. “Last year, it was more of dollar illiquidity. This year, it is naira illiquidity.”

May & Baker, which is building the country’s first vaccine plant, is responding by cutting production at its water-bottling and instant-noodle units, and focusing on more profitable pharmaceutical lines, Aboderin said. Interest rates on loans have also soared to as high as 25 percent, more than double the rate May & Baker is comfortable paying, he said. Nigerian inflation eased to 16.05 percent last month after reaching a record 18.7 percent in January.

Within Limits

The currency rule, introduced in January, is one of a series of measures aimed at managing dollar flows after a decline in the price and output of crude oil, which accounts for about two-thirds of government revenue. The regulator sells dollars directly to lenders on an almost weekly basis, which then supply these to their customers.

By depositing cash with lenders, companies are able to assure the regulator that they have the money to buy the foreign currency, said Yinka Sanni, chief executive officer for Stanbic IBTC Holdings Plc. The amount of naira required depends on the customer’s balance sheet strength, he said.

“It is within the rules. It is a product that is acceptable and endorsed by the regulator,” Sanni said. “No bank is doing anything outside the rules. If they were, the CEO would have been cautioned by the central bank.’’

A spokesman for the central bank didn’t respond to calls and emailed messages seeking comment. The naira was down 1.25% at 361.5 per dollar in the interbank market as of 16.13 p.m. in Lagos on Thursday.

Limiting Access

Special auctions that are being used by the central bank to make “massive injections of cash” to the government, effectively raised banks’ cash-reserve requirements beyond the stipulated 22.5 percent, said Monetary Policy Committee Doyin Salami, who has previously been critical of the policies of Governor Godwin Emefiele.

“We thus find ourselves at a point where government borrowing from the central bank is neutralized by raising the cash-reserve ratio of banks, thereby limiting private-sector access to credit,” Salami said after the monetary policy committee’s July 24-25 meeting, according to a central bank statement published Tuesday.

Nigeria sold 364-day bills at a yield of 17 percent and 182-day securities at 16.8 percent at an auction on Wednesday, according to the regulator.

“The Central Bank of Nigeria’s efforts have in many ways helped stabilize the foreign-exchange market,” said Omotola Abimbola, a banking analyst at Afrinvest West Africa Ltd. in Lagos. “But the unintended consequence has been that banks have restricted credit extension to the private sector due to the high yields on government securities as well as low risk appetite.”

Growth in credit extended to the private sector slowed to 0.9 percent this year through July, compared with 19.8 percent in 2016, according to central bank data. Policy makers need to tackle a lot more than dollar liquidity to bolster economic growth and reduce the country’s dependence on oil, Abimbola said. This would include easing monetary policy by lowering interest rates from a record high, addressing infrastructural shortcomings, such as road, rail and power, and improving the productivity of state institutions, he said.

Nigeria’s economy expanded 0.55 percent in the three months through June, ending five straight quarters of contractions that saw gross domestic product shrink 1.6 percent in 2016, the first drop since 1991. The improvement came after oil output increased and authorities boosted the supply of foreign currency needed by manufacturers to import supplies.

Flour Mills of Nigeria Plc, the country’s biggest miller by market value, is planning to issue as much as 40 billion naira in bonds next year and is also considering a rights issue to enable it to deal with funding challenges arising from a scarcity of naira and high interest rates, Managing Director Paul Gbededo said.

“Continued tightness in the market will keep interest rates high,” said Pabina Yinkere, an analyst at Vetiva Capital Management in Lagos. “High interest rates increase the probability of default and make banks cautious in growing loans, particularly to SMEs. If banks do not lend it affects overall economic activity and stalls growth.’’

Source: Bloomberg

Economy

FG Approves Payments to 1,240 Contractors to Ease Liquidity Pressure

Published

7 hours ago

08/06/2026

Modupe Gbadeyanka

By Modupe Gbadeyanka

This news will surely excite local contractors with verified claims of N100 million or less, as the federal government has approved their payments.

This approval for the disbursement was given by the Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele.

This followed a verification and reconciliation exercise designed to ensure only validated claims qualify for payment.

The beneficiaries cover contractors across multiple ministries, departments and agencies. The release of the funds is expected to enable contractors to return to project sites, pay workers, settle suppliers and meet outstanding financial commitments.

In an announcement on Monday, the Federal Ministry of Finance also said this latest batch of payments would ease liquidity pressure on small businesses and accelerate economic activity nationwide.

It was noted that the payments for verified claims of N100 million below were strategically done to spread economic impact broadly rather than concentrate disbursements among a handful of large firms.

The payments form part of a broader push to clear inherited contractor obligations, with over N700 billion verified in recent months.

“For many beneficiaries, the release of funds represents more than a financial transaction. It provides the certainty needed to sustain operations, preserve jobs, complete ongoing projects, and contribute to economic recovery and growth,” the ministry said in a statement.

Economy

Excitement as Invest in Lagos Summit 3.0 Kicks Off

Published

8 hours ago

08/06/2026

Aduragbemi Omiyale

By Aduragbemi Omiyale

Lagos State is currently agog because of the high-profile guests in the city for the Invest in Lagos Summit 3.0 commencing today, Monday, June 8, 2026.

The programme, which ends tomorrow, is themed Lagos: Business Gateway to Africa. It will feature a line-up of sessions focused on Lagos as Africa’s Global Gateway, the Future of Technology and Innovation, Unlocking Investment, Building the Cities of the Future, Global Partnerships for Growth, Talent, Creativity and Culture, and Energy and Sustainability.

The event is being put together by the Lagos State government and Commonwealth Enterprise and Investment Council (CWEIC).

The venue of the summit, Eko Hotel and Suites, is already lively, with the Lagos State Governor, Mr Babajide Sanwo-Olu; the Minister of Finance and Coordinating Minister for the Economy, Mr Taiwo Oyedele; the co-chair of the Lagos Finance and Investment Council (LFIC), Aigboje Aig-Imoukhuede; and the chief executive of Moniepoint Incorporated, Mr Tosin Eniolorunda, amongst others expected to speak.

The workshop is designed to position Lagos as Africa’s premier destination for investment, trade, innovation, infrastructure development, and economic partnerships.

It is focused on unlocking investment opportunities and accelerating sustainable economic growth. It will bring together high-level participants from across the public and private sectors to explore opportunities in technology, infrastructure, energy, manufacturing, finance, creative industries, and urban development.

According to the Lagos Commissioner for Information and Strategy, Mr Gbenga Omotoso, the programme has been carefully structured to move beyond conversations and focus on actionable outcomes that can stimulate investment inflows into Lagos State.

He said the conference will provide a platform to showcase the state’s investments in transportation, technology, energy, manufacturing, tourism, and urban development, while also highlighting opportunities for local and international investors.

“Invest in Lagos 3.0 is more than a conference; it is a strategic platform designed to connect investors with opportunities, facilitate meaningful partnerships, and showcase Lagos as Africa’s most attractive investment destination.

“Through this summit, we are bringing together government leaders, global investors, development institutions, and business executives to explore opportunities that will unlock growth, create jobs, and accelerate economic development across Lagos and Nigeria,” the Commissioner, who doubles as the Head of the Media Subcommittee, stated.

The gathering will also feature investment pitches by governors, exhibitions by participating organisations, networking opportunities, a gala dinner, and site visits to major infrastructure and industrial projects, including the Dangote Petroleum Refinery, Lagos Free Zone, Lagos Port, and RusselSmith’s advanced manufacturing facility.

Economy

Nigeria to Frustrate Illegal Fishing Via €59m West Africa Ocean Initiative

Published

9 hours ago

08/06/2026

Adedapo Adesanya

By Adedapo Adesanya

The federal government has expressed readiness to leverage the €59 million West Africa Sustainable Ocean Programme (WASOP) as part of intensified efforts to combat illegal, unreported and unregulated (IUU) fishing while strengthening sustainable management of its marine resources.

The Minister of Marine and Blue Economy, Mr Adegboyega Oyetola, made this known in Abuja during a meeting with the European Union Ambassador to Nigeria, Mr Gautier Mignot, where both sides reaffirmed their commitment to deepening cooperation on maritime security and sustainable ocean governance.

Welcoming the EU Ambassador, Mr Oyetola commended the group for its longstanding partnership with Nigeria, particularly its support for maritime stability in the Gulf of Guinea, a region critical to global shipping and regional economic development.

He noted that the West Africa Sustainable Ocean Programme (WASOP) presents a timely opportunity to strengthen coordinated action against illegal fishing, improve ocean governance, and promote sustainable exploitation of marine resources across West Africa.

He said Nigeria is keen to fully engage with the programme to attract technical and financial support that will enhance enforcement capacity and boost the country’s blue economy ambitions.

The Minister stressed that illegal fishing remains a major threat to the marine ecosystem and coastal livelihoods, warning that IUU fishing continues to deplete fish stocks, undermine food security, and erode the economic well-being of coastal communities.

He said: “Illegal, unreported, and unregulated (IUU) fishing is a direct threat to national security, food sovereignty, and the survival of our coastal communities. We cannot afford to stand by and watch our marine ecosystems be depleted and economic livelihoods eroded.

“We are calling for an era of stronger international collaboration, backed by aggressive monitoring and uncompromised enforcement systems, to permanently dismantle these illicit operations and safeguard our waters.”

Mr Oyetola also highlighted ongoing reforms in Nigeria’s maritime sector under the National Policy on Marine and Blue Economy, which prioritises innovation, private sector investment, and sustainable development of ocean resources.

He referenced key milestones in the sector, including improvements in port operations and logistics, as well as enhanced maritime security.

He further noted that Nigeria is strengthening initiatives aimed at expanding its maritime infrastructure and improving competitiveness in global trade.

The Minister also reiterated the need for broader cooperation beyond piracy control, urging development partners to support Nigeria in addressing environmental crimes, human trafficking, and illegal fishing in a more integrated and coordinated manner.

He sought increased technical assistance from the European Union, particularly in surveillance systems, fisheries monitoring, and enforcement capacity to strengthen Nigeria’s ability to curb IUU fishing across the Gulf of Guinea.

On his part, Mr Mignot reaffirmed the European Union’s commitment to strengthening maritime cooperation with Nigeria and supporting regional efforts to ensure safer and more sustainable oceans.

He highlighted the West Africa Sustainable Ocean Programme (WASOP), a major EU-funded initiative designed to promote integrated ocean governance, sustainable fisheries management, and protection of coastal and marine ecosystems across West African countries.

According to him, the programme will support improved coordination among coastal states, strengthen enforcement mechanisms, and promote a more inclusive and sustainable blue economy in the region.