Nigeria’s ongoing scarcity of overseas trade is forcing corporates and companies to supply this useful resource on the parallel market, a former official with the Lagos Chamber of Commerce and Trade (LCCI) has mentioned. Based on Muda Yusuf, who’s the earlier director-general at LCCI, these shortages stem from the overseas trade market liquidity constraints which were skilled within the first half of 2021.
As famous in a report primarily based on knowledge from July 8, 2021, the turnover at one among Nigeria’s a number of official foreign exchange markets dropped by 24.5% to $526.79 million. The report provides that the majority of those trades had been consummated on the trade fee of “between N400 and N460 to the greenback.” In distinction, the Nigerian naira’s parallel market trade fee presently stands at N505 per greenback in keeping with Abokifx.
In his remarks, whereas talking on the Finance Correspondents Affiliation of Nigeria (FICAN) discussion board, Yusuf warned that such overseas trade shortages might negatively affect the nation’s banking system. Yusuf defined:
Overseas trade illiquidity aggravates funding threat which might negatively affect asset high quality within the banking system. Overseas currency-denominated loans account for between 30 per cent and 35 per cent of banks’ mortgage books. Overseas trade volatility is related to dangers regarding asset high quality and monetary stability.
Conducive Enterprise Setting
The report quotes Yusuf arguing the case for a conducive enterprise local weather which he insists will “create extra avenues for funding” for monetary establishments. As well as, extra worthwhile asset lessons can be wanted for such worthwhile investments to happen, he mentioned.
Moreover, Yusuf can also be quoted stressing the “want to handle the structural, coverage, institutional and regulatory constraints within the enterprise surroundings which might additionally lead to a discount in non-performing loans within the banking sector.”
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