By Elizabeth Adegbesan
Nigeria’s external sector appears to be in a sustained pressure despite the policies geared towards eliminating unwholesome practices in the foreign exchange market. Data from the Central Bank of Nigeria, CBN, shows that outflow from the economy is far more than inflow as captured the first five month of this year.
Though outflow through the CBN declined Month-on-Month, MoM, in April, it had risen Year-on-Year, YoY, in the autonomous market, while net inflow recorded massive decline.
Outflow through the CBN declined by 10.4 per cent to US$2.58 billion, compared with the US$2.88 billion in the preceding month, due largely to the Bank’s policy on foreign exchange market.
However, YoY, outflow through autonomous sources, rose by 23 per cent to $160 million from $130 million in April 2020.
Overall, the country’s net inflow fell by 66 per cent to $2.23 billion in April 2021, compared with a net inflow of $6.4 billion in the corresponding period of last year.
Between January and April this year, the regulator dolled in several policies in a bid to stabilize the country’s currency and boost the nation’s foreign exchange market.
In January, CBN in a circular, warned International Money Transfer Operators (IMTOs) to desist from facilitating diaspora remittances in naira, contrary to its earlier directive that it must be in foreign currency.
The CBN also announced that it would expel exporters who refuse to remit foreign exchange proceeds in the Nigerian Autonomous Foriegn Exchange (NAFEX) market. This was a move to streamline supply and ensure there is enough to meet rising demand for forex.
In March, the regulator introduced a ‘Naira 4 Dollar Scheme’ for diaspora remittances, which offers recipients of diaspora remittances through CBN’s IMTOs to be paid N5 for every $1 received as remittance inflow.
Foreign exchange inflow through the economy dropped year-on-year (YoY) by 49 per cent to $4.97 billion in April 2021 from $9.72 billion in April 2020.
A breakdown of activities during the review period showed that foreign exchange inflow through the CBN was $1.66 billion in April 2021, a decrease of 72 per cent below $5.94 billion in April 2020.
In addition, inflow through autonomous sources fell by 12 percent to $3.31 billion in April 2021 from $3.78 billion in April 2020.