Nigerian central bank plans to alter its foreign-exchange bidding rules to favor the production of goods that replace imports, in a bid cut dollar demand.
The new rule, which will be market driven, will prioritize making dollars available to manufacturers “who display verifiable progress in our imports substitution and job creation drive,” the regulator said in an emailed presentation.
High demand for the greenback is putting pressure on foreign-exchange reserves. which at $39.9 billion on Feb. 3 is the lowest in more than four months.
Not even the higher-than-normal oil prices have boosted the reserves as Africa’s largest crude producer is unable to fulfill its OPEC+ quotas due to crude theft and diversion of oil revenues to subsidize gasoline prices for its population.
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The country’s central bank has adopted demand management and three devaluations since 2020 as it sought to make the exchange rate more reflective of market factors.
The banking regulator is looking to support investors in “greenfield” and “brownfield” projects who want to produce goods currently imported into the country and also create jobs, Governor Godwin Emefiele said in the presentation.
“Foreign exchange support will be solely for the importation of spares, plants and equipment needed to increase production capacities of these companies,” he said.
