The world bank has made known their concern about the foreign exchange measures issued by the central bank of Nigeria. It recently urge that the CBN to lessen the pressure on the Forex market in Nigeria.
This was stated by Shubham Chaudhurivia, country’s world bank director, through an email to an enquiry by bloomberg
“stronger action and a clear commitment from the CBN would go a long way towards facilitating a stronger recovery, despite its recent resumption of dollar sales to the BDCs after a 5-month suspension.” Chaudhuri stated.
There has been a serious shortage of the greenback some months in Nigeria, as a result of the coronavirus pandemic and the crash of crude oil prices, which is a source of the country’s foreign exchange earnings. The pandemic led to economic decline globally including Nigeria, and very low foreign exchange inflow.
CBN in the month of march suspended the weekly inter-bank foreign currency sales, which limited the world bank to intervene in the Forex Market.
The dollar scarcity, which is a major concern, led to a backlog of about $2 billion forex demand by importers and foreign investors, who are looking to restore their funds. The CBN in order to alleviate this issue, reduce pressure on the forex market and defend naira made some measures.
But, stakeholders in the companies in Nigeria are complaining that these measures from the CBN are affecting their transactions, and the capacity to repay their dollar debt.
Chaudhuri gave a good example of that is the Azura Power Project in Edo state, which is partly sponsored by the International Finance Corporation (IFC) – the private lending arm of the World Bank. It is one of the many established local and foreign private firms that are having a lot of issues in assessing forex to meet their business and contractual obligations.