Nigeria Running Out Of Forex Amid Oil Price Collapse– Ex-US envoy

Nigeria is running out  of Foreign Exchange owing  to the plunge in global oil prices, the  former United States Ambassador to Nigeria, John Campbell, has said.

Campbell said this in an article published by the  Council on Foreign Relations.

CFR is a US based non-profit organisation specialising in U.S. foreign policy and international affairs.

According to Campbell,  the fallout in oil prices due to the coronavirus and lockdown has led to shortage in foreign exchange revenues.

He said, “Driven in part by the need for dollars, the government devalued the Nigerian currency, the naira, to 360 to the U.S. dollar, down from 306. That, apparently, was not enough. As of May 12, the naira is traded at 445 to the dollar on the street, and the one-year forward trading rate is 514 to the dollar, which means traders expect the exchange rate to fall even further.

“There are anecdotes (impossible to quantify) that rich Nigerians are getting out of the market and doing what they can to shelter their assets abroad—an old song in times of instability, whether economic or political.

“The picture is bleak for the formal economy made up of the small middle class and the oligarchs. With its direct and indirect overreliance on oil, this part of the economy is fragile. But it is estimated that 65 percent of Nigerian GDP is produced by the informal sector. 

“Further, another rough estimate is that half of the population continues to be rural. Hence, together with the fact that government has little or no role in the lives of most Nigerians, it is likely that most Nigerians are not significantly directly impacted by oil prices, government revenue, stock indices, and foreign exchange shortages; the ongoing breakdown in security in many parts of the country is likely to be of greater concern,” he added.

The Central Bank of Nigeria had adjusted the naira from N306 to N360 at the official rate, while naira currently sells at N455 against dollar  at the parallel market 

The Manufacturers Association of Nigeria has said that members are unable to access foreign exchange.

The apex bank had announced the resumption of  the sale of dollars at $100 million weekly, a cut from $250 million intervention every two weeks.

However the apex bank said the intervention was for, “strategic imports.”