Nigeria

Treasury FX & Banking in Nigeria

Report date: 
12 Jun 2023

Commentary

If a country ever deserved the term “Complex Country”, it has to be Nigeria. The country itself has a complex composition: it is made up of many varied ethnic groups who have a long history of strife between each other, including a very bloody civil war in the twentieth century. It has immense mineral wealth, especially oil, and some very crowded cities, which are often home to massive traffic jams. Despite the oil riches, the country has huge economic issues and a long history of exchange controls and significant devaluations – the naira has gone from parity with the US dollar in the 1970s to between 450 and 600 to the dollar today – depending on whether you use the official or the black market rate.

This brings us to one of the key challenges facing international companies operating in the country. The many regulations are applied in ways which are not always transparent, and there are many local players who show astounding creativity in finding ways round them. So the MNC’s dilemma: how do I make sure these solutions are truly legal before I use them?

In short, welcome to Africa.

Whatever the regulatory situation, Nigeria has a population of 80 million people, oil wealth, and a large diaspora. So it is an important market that is difficult to ignore. Participants all face the same issues:

  • Difficulty accessing foreign currency
  • Assessing various proposals, including brokers, private FX sales, buying offshore bonds
  • Trapped cash, and how to invest it
  • Which banks to deal with? Local banks are needed for collections in remote areas, and they usually
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