Nigerian manufacturers are struggling to stay in business because a foreign-exchange shortage spawned by the collapse in oil prices means they can’t import raw materials.
According to a report by Bloomberg, the industry’s difficulties are the latest signs of strain in Nigeria’s foreign-exchange regime.
The central bank was forced to devalue the naira in March as income from crude sales that generate 90% of the West African nation’s export earnings dried up. Foreign investors looking to repatriate their funds have been asked to be patient.
Members of the Manufacturers Association of Nigeria have been unable to access hard currency for the past five weeks, the group said in a report at the weekend.
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Investment bank FBNQuest estimates there’s a $1 billion backlog of unmet dollar demand in Nigeria.
“Everybody is trying to remain afloat,” Mansur Ahmed, president of the MAN, said Monday. “Certain sectors will suffer more than others, notably those companies that are heavily dependent on imports” such as pharmaceuticals, electrical-products and automobile businesses, he said.
The naira currently trades at 445 per dollar on the streets of Lagos, the commercial capital, compared with the official rate of 386 per dollar. Twelve-month naira forwards were trading at about 514 per dollar on Monday, suggesting investors see the currency falling to around that level in a year.
Economies around the world, developed and emerging alike, have been caught short of dollars thanks to the coronavirus crisis.
