A message to Nigerian banks by the high priest of Nigerian banking: “The era is coming to an end when because your customers need $100 million in foreign exchange or $200 million, you now want to go to the CBN and pack all the dollars. It is coming to an end before or by the end of this year. We will tell them don’t come to the Central Bank for foreign exchange again, go and generate from export proceeds,” Central Bank of Nigeria governor Godwin Emefiele.
The Nigerian forex crisis is spiraling out of control in defeat to the stringent policies initiated by the Central Bank of Nigeria (CBN) to tackle it.
The backdrop is not only evident in rising inflation rate, now 20.52%; it is also visible in its bearing on international transactions. The CBN has continued to limit the amount of dollars that Nigerians can spend on international POS. But that, like every other initiative it has taken, has failed to ameliorate the forex crisis.
Now banks are completely running out of dollars even though the CBN had earlier in the year, halted supply to Bureau de Change operators, opting to supply dollars to banks that will in turn sell directly to customers.
If the CBN does it, what that means is simple: you cannot run a manufacturing business in Nigeria which uses imported raw materials without having a clear strategy to deepen exports. In other words, every business in Nigeria which uses foreign inputs should have a foreign desk that can receive foreign currencies.
This is not a radical playbook. In Tekedia Capital, we encourage our startups to do everything necessary to earn US dollars, Euro, Pounds, etc even as they pack Nairas. Our thesis has been clear: Nigeria’s economic growth is slower than population growth, and within years, most of the big brother policies in Nigeria will stop working. Only companies that take charge of their futures will remain and thrive.
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