Economy
The Currency Risk for Nigerian Businesses is Very Real – What Are the Best Ways to Handle It?
There is always some risk even in the most surefire business ideas – after all, nothing ventured, nothing gained right?
But businesses that operate by using different currencies for buying and selling, face uniquely pertinent risks from changes in the volatile currency markets – especially when dealing with a marginal currency like the Nigerian Naira.
In this post, we will take a close look at just what these risks are and how Nigerian businesses can best guard against them.
Despite experiencing some hardships since the oil crash of 2014, Nigeria is Africa’s largest economy by some distance and in many ways, it could be viewed as an African success story. The Lagos business districts are growing fast as young, entrepreneurial Nigerians form startups at a truly impressive rate, and ever more international businesses are now taking note.
As Nigeria begins to look outwardly across the continent and the globe, more and more domestic businesses find themselves transacting internationally either in buying or selling goods, or ordering or providing services.
Whilst doing business with the world offers huge opportunities, the challenges that come with transacting across borders in different currencies can be very intimidating for any business that relies on a currency as peripheral, and volatile as the Naira.
The Certainty of Change
Indeed, businesses that deal with clients or suppliers in other countries generally need the currency exchange rates to be very stable – fluctuations affect a transaction’s cost-effectiveness and can make all the difference between profit and loss.
For example, a Nigerian fashion house might buy its fabric from Senegal and then sell its finished goods domestically. If the Naira drops against the CEFA though, then the cost of importing fabrics will go up.
Whilst the firm can try to pass the difference and increase in costs onto the customers by charging more for the end product, many customers are more likely to find the goods to be overpriced. This can be disastrous for companies who are locked into contracts or simply rely heavily on a particular supplier as they can be pushed into running their once profitable business at a loss.
Businesses in the western world also face this dilemma too but currencies like the USD, EUR and GBP are generally pretty stable. As such whilst fluctuations can certainly hurt business, they are more often than not, possible to absorb.
However the Nigerian Naira has endured something of a torrid ride over the last 5 years; in 2017, $1 USD = N315 whereas the rate is currently $1 = N414! Trying to establish a medium to long term strategy for an international basis is very difficult when that business is built on a shaky foundation such as the Nigerian Naira.
The situation gets even more complex. Once again western business enjoys an advantage in the business foreign exchange field – there is a whole range of ways in which western businesses can guard against fluctuations in the currency markets that are unavailable to Nigerian business.
In particular, UK businesses enjoy a wide selection of Foreign Exchange possibilities on account of its gold-standard credit rating, libertarian financial services climate and highly trusted regulatory framework.
On the other hand, a lot of these ways are simply not available in Nigeria as a lot of the requisite service providers are either unwilling or unable to offer business in the country.
This is mostly owing to perceived currency and political stability issues mixed with an unfortunate reputation of Nigeria as an incubator of financial crime. Whilst Nigeria is not currently suffering from any US-imposed financial sanctions, it is feared that a change of regime could lead to this happening.
How to Hedge FX as an SME
There are 3 very common methods of currency hedging – ways in which businesses can indemnify themselves against changes in the currency market.
- Forward Contracts
Forward contracts are when a business agrees to buy a set amount of a given currency, over a specified time, at an agreed, settled rate. For example, a Nigerian business may anticipate that it will need to buy $10,000 over the coming year to pay suppliers. Rather than buy it incrementally as and when it is needed, a forward contract would allow them to “lock-in” the current exchange rate allowing them to budget the N4,111,600.00 they will need.
Forward contracts serve to protect a business from a drop in the value of their currency, but on the other hand, if the Naira was to increase against the dollar then the business would be losing out and paying more for the dollars. Forward contracts can be a bit of a gamble but they do provide certainty.
Problematically though, most of the companies dealing in forward contracts are not offering their services to clients in Nigeria. However, in September 2021, Nigeria did agree to a record $18 billion in OTC forward contracts so the outlook is at least improving.
- Currency Brokers & International Payment Providers
If a business is buying large amounts of a given currency, then a currency broker may be able to help them get a better exchange rate than the one generally available on the market. The issue Nigerian businesses face here though is simply that many currency brokers have a low appetite for buying Naira if they will deal with Nigerian business at all.
When making sizable international business payments (such as for an invoice) then an international transfer service provider can help a business save fees on international bank payments and may also be able to help them ensure a better rate. Unfortunately, though, international business payment service providers don’t accept any Nigerian business.
- Multi-Currency Accounts
Another very useful way for FX hedging is to open a multi-currency account. Multi-currency accounts allow a business to hold account balances in different currencies via sub-accounts or ‘pots’ in addition to their main balance. A Nigerian business could hold its main balance in Naira but then have a USD pot and a CEFA pot. The advantage is that they have foreign currency ready to use and are once again protected by the ebb and flows of the Naira.
Multi-currency accounts are very useful for companies that regularly deal in a small number of particular currencies.
Once again though, a lot of the international or borderless banks that offer multi-currency accounts don’t allow balances to be held in Naira and relatively few Nigerian banks allow multi-currency balances at all.
So, as we can see, all across the world, small businesses have dedicated service providers who are able to assist with FX management and payment. However, in Nigeria few, if any of these options are available.
How To DIY Hedge Against Currency Fluctuations
In the absence of a supportive financial service sector, Nigerian business owners have to utilise their talent for resourcefulness and look for ‘DIY’ hacks for currency hedging.
- Buy Cash Currency
Without access to either brokers or multi-currency accounts, Nigerian businesses are largely unable to hold balances in foreign currencies. They can, however, still hold cash in whatever currency they can get their hands on. Currencies like the USD, Euro and GBP are available worldwide and the CEFA can be obtained in many Nigerian money exchanges or by hopping over the border.
Therefore, when the exchange rate moves to a favourable position (i.e. the Naira becomes strong against the USD), a Nigerian business person can simply take advantage, buy USD cash and lock it securely away until it is needed. They can use it to make international payments via services such as Western Union or Ria or can simply sell it back when the rate changes in the other direction.
- Borderless Bank Accounts
There are an increasing number of fintech startups offering “borderless bank accounts” to residents of an increasing number of countries. These offer Nigerians an opportunity to get an international bank account in a foreign currency via the backdoor. However, few of them permit Nigerian citizens to hold accounts. Even Wise has stopped servicing Nigerian customers at least for now.
- Paypal
Whilst its fees and exchange rates are not the best, Paypal does allow Nigerians to hold accounts and will also permit them to hold USD balances if they receive funds in USD.
- Cryptocurrency
The cryptocurrency market is something of a wild frontier and as such, many platforms will accept customers from all over the world including Nigeria. Therefore a business could buy a given cryptocurrency and then hold it in their crypto-exchange until it was needed.
Whilst critics may point out that most cryptocurrencies are far more volatile than even the Naira, there are stable coins like the USDT which tracks the USD rate 1 for 1. Therefore, in buying USDT, a Nigerian business can almost hold a USD balance which can be converted back to fiat when they need to use it.
In Summary
From Lagos to London, international trade is both exciting and complex. However, Nigeria and the developing world, in general, do face some extra difficulties.
Still, whilst these difficulties can be restrictive they can be overcome or at least countenanced with some determination and ingenuity – and both of these are traits that Nigeria holds in abundance.
Nigeria’s business environment continues to evolve rapidly, presenting both opportunities and challenges for entrepreneurs. In recent years, digital transformation has become a cornerstone for growth, with businesses across various sectors embracing new technologies to remain competitive. For those looking to thrive in this dynamic landscape, understanding market trends and leveraging innovative strategies is crucial.
Whether it’s a startup or an established enterprise, success often hinges on adaptability, strategic planning, and the ability to seize emerging opportunities. Even in sectors like entertainment and sports, where trends shift quickly, businesses must stay agile to maintain relevance. For instance, some entrepreneurs are exploring new revenue streams such as online platforms, including activities like แทงบอล ufabet, which have gained popularity due to their accessibility and appeal to a broad audience.
The Nigerian Business Landscape in 2025
The Nigerian business landscape in 2025 is marked by rapid technological adoption, increased competition, and a growing demand for digital solutions. Sectors such as fintech, e-commerce, and digital marketing have seen significant growth, driven by a young, tech-savvy population. Entrepreneurs are now leveraging digital tools to streamline operations, reach wider audiences, and improve customer engagement. The government’s push for economic diversification has also created new opportunities in agriculture, manufacturing, and renewable energy. However, businesses must navigate challenges such as regulatory hurdles, infrastructure gaps, and fluctuating market conditions. Despite these obstacles, the resilience and creativity of Nigerian entrepreneurs continue to drive innovation and growth.
Why Strategic Planning is Essential
Strategic planning is the foundation of any successful business. It involves setting clear goals, identifying resources, and developing actionable steps to achieve objectives. In Nigeria’s competitive market, businesses that invest time in strategic planning are better equipped to anticipate challenges, capitalize on opportunities, and adapt to changing circumstances. Effective planning also helps businesses allocate resources efficiently, minimize risks, and maximize returns. Entrepreneurs should regularly review and update their strategies to stay aligned with market trends and customer needs. By doing so, they can maintain a competitive edge and position their businesses for long-term success.
Leveraging Digital Tools for Growth
Digital tools have revolutionized the way businesses operate in Nigeria. From cloud-based software to social media platforms, these tools enable businesses to automate processes, enhance communication, and reach a global audience. For example, e-commerce platforms allow businesses to sell products online, while digital marketing tools help them target specific customer segments and measure campaign effectiveness. Additionally, mobile payment solutions have made transactions faster and more secure, improving customer satisfaction. By embracing digital transformation, businesses can increase efficiency, reduce costs, and expand their market reach.
Building a Strong Team Culture
A strong team culture is vital for business success. It fosters collaboration, boosts morale, and drives innovation. Nigerian entrepreneurs should prioritize creating a positive work environment where employees feel valued and motivated. This can be achieved by promoting open communication, recognizing achievements, and providing opportunities for professional development. A cohesive team is more likely to overcome challenges, generate creative solutions, and contribute to the overall growth of the business. Investing in team-building activities and leadership training can further strengthen the organizational culture.
Overcoming Common Challenges
Nigerian businesses face a range of challenges, including access to finance, regulatory compliance, and competition. Access to capital remains a major hurdle for many entrepreneurs, particularly startups and small businesses. Regulatory compliance can also be complex and time-consuming, requiring businesses to stay informed about changing laws and policies. Additionally, intense competition in key sectors can make it difficult for businesses to differentiate themselves. To overcome these challenges, entrepreneurs should seek support from government agencies, industry associations, and financial institutions. Building strong networks and partnerships can also provide valuable resources and guidance.
Adapting to Market Trends
Adapting to market trends is essential for staying relevant in Nigeria’s fast-paced business environment. Entrepreneurs must stay informed about emerging trends, consumer preferences, and technological advancements. This can be achieved by conducting market research, attending industry events, and monitoring competitor activities. By anticipating changes and responding proactively, businesses can seize new opportunities and mitigate potential risks. For example, the growing demand for sustainable products and services presents opportunities for businesses to innovate and differentiate themselves.
Importance of Financial Management
Effective financial management is critical for business sustainability and growth. It involves budgeting, cash flow management, and financial reporting. Nigerian entrepreneurs should prioritize financial literacy and seek professional advice when needed. Proper financial management enables businesses to track performance, make informed decisions, and secure funding. It also helps businesses comply with regulatory requirements and build trust with stakeholders. By maintaining sound financial practices, entrepreneurs can ensure the long-term viability of their businesses.
Future Outlook for Nigerian Entrepreneurs
The future outlook for Nigerian entrepreneurs is promising, with continued growth expected in key sectors such as technology, agriculture, and renewable energy. The government’s focus on economic diversification and infrastructure development is likely to create new opportunities for businesses. Additionally, the rise of digital platforms and e-commerce is expected to drive innovation and expand market reach. Entrepreneurs who embrace change, invest in digital transformation, and prioritize strategic planning are well-positioned to succeed in Nigeria’s evolving business landscape.
By Adedapo Adesanya
The federal government, states and the Local Government Councils have received a sum of N1.928 trillion from the revenue generated in November 2025 by the federation.
According to a statement by the Federation Account Allocation Committee (FAAC), the earnings were shared at the December 2025 FAAC meeting held in Abuja, where the total distributable revenue comprised statutory revenue of N1.403 trillion, Value Added Tax (VAT) revenue of N485.838 billion, and Electronic Money Transfer Levy (EMTL) revenue of N39.646 billion.
It was disclosed that total gross revenue of N2.343 trillion was available in the month of November 2025, with N84.251 billion deducted for cost of collection and N330.625 billion for total transfers, interventions, refunds and savings.
FAAC stated that gross statutory revenue of N1.736 trillion was received for the month of November 2025, lower than the N2.164 trillion received in the month of October 2025 by N427.969 billion.
Gross revenue of N563. 042 billion was available from VAT in November 2025, lower than the N719.827 billion available in the month of October 2025 by N156.785 billion.
In November 2025, Excise Duty increased moderately while Petroleum Profit Tax (PPT), Hydrocarbon Tax (HT), CIT on Upstream Activities, Companies Income Tax (CIT), CGT and SDT, Oil & Gas Royalties, Import Duty, CET Levies, Value Added Tax (VAT), Electronic Money Transfer Levy (EMTL) and Fees recorded substantial decreases.
From the N1.928 trillion total distributable revenue, the federal government got N747.159 billion, the state governments received N601.731 billion, and the local councils shared N445.266 billion, while N134.355 billion was given to benefiting states as 13 per cent of mineral derivation.
On the N1.403 trillion distributable statutory revenue, the national government received N668.336 billion, the 36 states got N338.989 billion, and the LGAs received N261.346 billion, and N134.355 billion shared as 13 per cent of mineral revenue.
In addition, from the N485.838 billion distributable VAT revenue, the central government got N72.876 billion, the state governments shared N242.919 billion, and the local councils shared N170.043 billion.
Further, N5.947 billion was taken by the federal government from the N39.646 billion EMTL, the states shared N19.823 billion, and the councils received N13.876 billion.
By Adedapo Adesanya
The duo of Golden Capital Plc and FrieslandCampina Wamco Nigeria Plc weakened the NASD Over-the-Counter (OTC) Securities Exchange by 0.04 per cent on Monday, December 15.
This pulled down the NASD Unlisted Security Index (NSI) by 1.37 points to 3,599.06 points from last Friday’s 3,600.43 points and the market capitalisation lost N820 million to close at N2.153 billion compared with the preceding session’s N2.154 trillion.
Golden Capital Plc depleted by 94 Kobo to end at N8.51 per share compared with N9.45 per share and FrieslandCampina Wamco Nigeria Plc depreciated by 63 Kobo to sell at N59.60 per unit versus N60.23 per unit.
During the session, the volume of securities traded at the session slumped by 98.4 per cent to 600,402 units from 37.4 million units, the value of securities fell by 99.8 per cent to N7.8 million from N4.9 billion, and the number of deals shed 36.4 per cent to 21 deals from 33 deals.
At the close of trades, Infrastructure Credit Guarantee Company (InfraCredit) Plc remained the most traded stock by value with a year-to-date sale of 5.8 billion units valued at N16.4 billion, followed by Okitipupa Plc with 178.9 million units transacted for N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.
InfraCredit Plc was also the most traded stock by volume on a year-to-date basis with 5.8 billion units worth N16.4 billion, trailed by Industrial and General Insurance (IGI) Plc with the sale of 1.2 billion units for N420.3 million, and Impresit Bakolori Plc with 537.0 million units traded for N524.9 million.
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