Foreign currency restrictions to stay for now

NIGERIA would keep its restrictions on foreign currency for now to preserve the country’s currency reserves amid plunging oil revenues, but would eventually relax them, the country’s vice-president said.

Africa’s largest oil producer has restricted imports since June to offset a fall in vital oil revenues which has hit public finances and the naira currency. Nigeria’s manufacturing industry body has warned that some companies might be forced to close plants, because they could no longer import raw materials or equipment for their production.

Vice-president Yemi Osibanjo defended the restrictions, saying they had enabled the country’s foreign currency reserves to stabilise, but said they were only a short-term measure.

“We want an open foreign exchange market. But that market must be one that has the resources to make it robust and open,” he said on Saturday. “So, long-term, we expect that the central bank will ease restrictions as we go along. In fact, medium- to long-term, and hopefully we will be able to go back to more or less where there was greater freedom of movement (before) current restrictions,” he said.

Nigeria’s economic growth should pick up “a bit” in the next quarters, after halving in the second quarter year-on-year, as power supplies had improved.

“We are well on the way to getting out of the worst part of where we are today,” he said, dismissing fears the country could slip into recession next year. He also said there would be no exemption for state bodies to transfer revenues into a single account at the central bank, part of a drive to combat graft by President Muhammadu Buhari. Banks have complained the rule has sucked up liquidity.

Osibanjo said some institutions, such as oil firm NNPC, had initially sought an exemption, but were now at least partially abiding by the rules.

“I know that even NNPC has complied to a certain extent. I know that they may have some outstanding (revenues),” he said. “But NNPC has definitely started to comply.”

Last week, Buhari submitted his cabinet list to the Senate for approval, after facing criticism for waiting for four months since taking office to do so. Osibanjo said his government was preparing the 2016 budget despite the lack of a cabinet. – Reuters