Exporters have been accused of diverting export proceeds to the parallel market thereby putting pressure on the naira exchange rates against the dollar, global forex dealers have disclosed.
Trading Desk Manager, AZA, a global forex trading portal, Murega Mungai, said the depreciation of the naira will continue, until there is regulatory sanctions against the perpetrators of the act, especially exporters.
The Central Bank of Nigeria’s (CBN’s) Foreign Exchange Manual provided that all exporters should repatriate export proceeds back to the country to support the local currency and boost the economy, but compliance with the guidelines has become a major challenge.
Nigeria also receives over $25 billion annually from Diaspora remittances, mainly from its citizens living or working in Europe, America and Asia. The diaspora remittances inflows now diverted to parallel market have for years remained the backbone of the naira by deepening market liquidity.
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In a report titled: “Christmas stocking is no gift for Naira” Mungai said many companies and individuals are diverting export proceeds and remittances away from approved channels while directing unmet dollar demand to the parallel market.
He disclosed that as dollar scarcity continues to linger, the naira will come under more pressure that will weaken its value against other global currencies.
“The naira traded as low as N496 to the dollar as Nigeria recorded its worst recession in three decades, with the economy shrinking 3.62 per cent in the third quarter as a result of lockdowns, border closures, currency restrictions and protests. The dollar demand pressure continues to weigh in from importers stocking up for Christmas sales,” Mungai added in emailed note to foreign investors.
Also, dollar demand pressure has continued to weigh in from importers stocking up for Christmas sales and finding it difficult to source from the official market, are directing their demand to the parallel market.
The naira yesterday exchanged at N496 to dollar at the parallel market as exporters continued to move huge free earnings to the parallel market where major transactions are now being handled.
Shipping and airline companies have also been accused of depriving Nigeria of the much-needed dollar earnings by not remitting export proceeds.
The CBN has been monitoring non-oil exporters, especially airlines and shipping firms, and assessing their compliance with the export proceeds repatriation policy.
In a circular to authorised dealers, Nigerian Custom Service, (NCS), Nigerian Shippers Council (NSC) and other stakeholders, CBN Director, Trade & Exchange Department, O.S Nnaji, said the bank had observed with dismay, the non-compliance by shipping and airline companies to its directive on export proceeds remittance.
The CBN also directed all banks to submit the names, addresses and Bank Verification Numbers (BVN) of exporters that have defaulted in repatriating their exports proceeds, for further action.
CBN Governor, Godwin Emefiele, further met with Chief Executive Officers of multinational companies to discuss the revamp of Nigerian exports to earn more foreign exchange.
Further analysis of the AZA report showed the International Monetary Fund (IMF) projections that bunched African tourist hotspots like Mauritius, Seychelles and Gambia with oil-dependent economies, notably, Nigeria and Angola, as the most vulnerable to prolonged effects of the post-COVID-19 pandemic slowdown.
Even with a global recovery, the IMF notes that tourism is unlikely to pick up any time soon.
“Ceteris paribus, those countries with significant agriculture sectors will recover faster, such as Rwanda and Kenya. The Forex market signals similar conclusions. Countries with a high dependency on oil and tourism have experienced more pressure on their currencies as dollar inflows dry up, compared with those that are more diversified. In line with this, we are long-term more constructive on the outlook for Kenya’s Shilling than the Naira or Kwanza,” the report said.
