• Monday, July 15, 2024
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BusinessDay

US Commerce Secretary hints at factory lay-offs in Nigeria

Penny-Pritzker

Foreign-exchange controls implemented by Nigeria’s government over the past year are beginning to lead to factory lay-offs, according to Commerce Secretary Penny Pritzker.

“It sounds like you’re starting to see factory lay-offs,” Pritzker said. “That’s not good for Nigeria. And, of course, President Buhari is focused on inclusive growth. So, pointing out some of the contradictions between objectives and policies is part of the conversation we’ll have.”

She said the exchange controls hinder the ability of U.S. companies to do business in Africa’s largest economy.

U.S. companies have “been quite explicit it’s a barrier to trade,” Pritzker said in an interview in the Nigerian commercial capital, Lagoson Monday.

The policies also hurt Nigerian manufacturers because they import about 52 percent of their inputs and need dollars to pay for those, she said. Pritzker will raise the issue with Nigerian President Muhammadu Buhari and Vice President Yemi Osinbajo in Abuja, the capital, on Tuesday.

Nigeria’s central bank, with Buhari’s backing, has tried stop the currency weakening amid a rout in prices of oil, which provides Africa’s largest crude producer with almost all export earnings, by restricting imports and foreign exchange trading.

The regulator has effectively pegged the naira at 197-199 since March. Foreign investors have sold naira bonds and stocks to avoid a devaluation they see as all but inevitable.

Forwards prices suggest the currency will weaken 20 percent to 249.5 per dollar in three months, while the black market rate fell to a record 305 this month.