Petrol consumption has drastically reduced in Nigeria with filling stations recording sharp drop in patronage as reports from across the country indicate.

This is largely connected to the high cost of premium motor spirit (PMS), also known as petrol, with a litre selling as much as N1,200 in some parts of the country.

The outright removal of fuel subsidy from PMS by President Bola Ahmed Tinubu’s administration on May 29, 2023, has triggered an increase in pump price, rising from N198 first to N580, and ultinately to between N998 and N1,200.

This represents an increase of about 600 per cent from N198, when it was sold pre-May 29, 2023.

With the high cost of the product, it has become virtually unaffordable to many Nigerians with citizens parking their vehicles at home, and filling stations recording low sales, as confirmed by stakeholders in interviews with our reporters.

There are conflicting reports on the daily petroleum consumption. While some reports said it has dropped by over 50 per cent, another report suggested it has dropped by 92 per cent from what it was in 2023.

But reports from across the states indicated a drastic drop with some filling stations complaining of very low patronage while many state that they are at the brink of shutdown.

Kano

Rising fuel cost has forced many car owners in Kano to park their vehicles and use alternative means of transportation.

While some use commercial tricycles to commute, others resort to trekking to reach their destinations.

A staff of Aminu Kano Teaching Hospital, Tijjani Muhammad, told Daily Trust that he has parked his car and is now using public transport to go to work.

The staff said he stopped conveying his children to school and asked them to use commercial tricycles. They too, he said, sometimes trek to school.

“I cannot afford to buy fuel at its current price. For me, driving my car is now a luxury because fuel price is prohibitive, and also same with food stuff. So, I have to choose which one is necessary.

“I decided to park my car and now trek to my workplace, which is even a daily exercise after all”, he said.

Aminu Dan Malam, a businessman at Kaloma area of Kano, said he has two cars but the high cost of petrol has forced him to park one.

“I now use motorcycle to go round for my business. And considering that we have to be taking the children to school, my wife is using the smaller car for that purpose.

“We hope the federal government will fast track the CNG initiative which they said will bring down the cost of transportation.

“What we are witnessing now in the country is not really good. The fact that petrol stations are recording low sales and people are parking their cars means low productivity. It is really not good because it also means consumption is not increasing. No economy can grow without production,” he said.

Abubakar Sadiq, a manager at an Aliko Oil petrol station, said sales have dropped to 10,000 litres a day compared to 15,000 litres daily in the past two months.

Sadiq, however, explained that though sales in terms of volume have dropped, sales in terms of cash collection remain unchanged because of the difference between the current price and the previous one.

“Car owners no longer fill their tanks like before because you need at least N55,000 now to have your tank filled. Many people just buy N20,000 or N25,000 worth of fuel and then plan their movements,” the station manager told one of our correspondents.

Unlike Danzaria, Hamza Adamu, an accountant in a private firm, said he has parked his car now because his monthly pay is not enough to buy fuel at its current price.

Kaduna

Alhaji Tajudeen Ajigbade, a resident of Kaduna said majority of people have now left their cars at home due to the present harsh realities.

“I know someone who has a car but rides a motorcycle instead because he has parked the car due to the cost of fuel. Let the government look at the situation with a human face because it is affecting many people,” he said.

He added that he does not drive around “carelessly” with his vehicle.

A manager at a filling station in Mando, Kaduna, Alhaji Balarabe Salis, said business is no longer what it used to be because their daily sales has dropped by almost 50 per cent.

According to him, prior to the fuel price increase, his filling station usually sells 5,000 litres of PMS daily, but now it finds it difficult to sell 2,000 litres in a day.

Borno

As the fuel price continues to rise, parents in Maiduguri said they grapple with the surging cost of transporting their children to school.

Most parents interviewed said they now close from work between 1pm to 2pm to pick their children home, while others parked their vehicles at the school to wait for the closing hours.

Abdulkareem Lawan, a parent residing in Bulumkutu bypass, explained how he made some adjustments to cope with the situation.

“As a father, I am groaning within myself because the situation has turned ugly. I spend N70, 000 on fuel monthly just to take my four children to school. So, I was forced to cut down on my movements.

“What I now do is to park my vehicle close to my children’s school and hops Keke Napep to my work place, and return after the school hours. It is more economical,” he said.

Gombe

In Gombe, managers of private fuel stations have also complained about low sales as a result of poor patronage by motorists amid the incessant hikes in petrol price.

Some station managers who spoke with Daily Trust, said that they are recording low sales currently, compared to a few months ago when the price was below N1,000 per litre.

Malam Shamsudeen, who is the manager of Dan Marna Filling Station, located along Biu Road,  said two months ago they used to sell between 18,000 and 20,000 litres daily, which is about two trucks of 45,000 litres every week. “But it is no longer the same,” he said.

Also, a staff of AYM Shafa Filling Station, located along Dukku Road, said before the recent increase, they sold a truck of 45,000 litres within three days.

“However, it is now taking us almost two weeks before we can sell the same 45,000 litres truck. This is when the neighbouring filling station adjacent to us is not selling. If they have fuel, it takes much longer to sell that quantity,” he said.

A public servant, Najib Sani said he only uses his car twice a month since the removal of the fuel subsidy over a year ago.

Benue

In Benue State, many petrol stations have closed down business while others continued to record low sales occasioned by the steady rise of fuel price.

Our correspondent reports that the situation has forced many car owners to also abandon their vehicles.

A manager of a private petrol station, Iorlumum Tyokyer, said they are recording low sales not just because people have parked their cars at home but that purchasing the product from major marketers also drives up the cost.

He said: “This situation is hurting us financially, and we are operating at a loss. We are deeply concerned about the fuel situation in the country. The government promised relief once the fuel subsidy was removed, but that hasn’t been our experience.

“The poor are struggling more, with transport and food prices skyrocketing, making survival challenging. I urge the federal government to take immediate action to lower fuel prices from what it is currently”, he said.

Tyokyer worried that only two months ago, fuel price skyrocketed to N950, which was beyond the reach of many Nigerians, but now selling at least N1,250 in private stations, causing them to continue recording lower sales.

Kwara

In Kwara State, a filling station owner at Offa Garage, who did not want his name in print, said sales have dropped compared to before the latest fuel hike.

“We used to sell 11,000 litres daily before the latest increment by NNPCL. But now, we hardly sell 8,000 litres a day, which is about a 25 per cent drop.

“And this is because fuel is a perfectly elastic product that has no alternative for now. If there is an alternative that is much available, it will reduce to 50 per cent”, he said.

On his part, the manager of a station at Oko-Olowo said the issue depends on the location of the filling station.

A lecturer at one of the polytechnics in Kwara State, who simply identified himself as Mr. AbdulSalam, told Daily Trust that he has since parked his car because of the hike.

Lagos

In Lagos, Daily Trust findings showed that some filling stations have stopped dispensing while those selling are recording low turnover.

A manager at one of the NNPCL outlets in Ikeja, expressed concern over the level of patronage, saying it has declined since the hike in the price of fuel.

He added that many customers rarely fill up their tanks while those that filled their tanks rarely return to refill until the end of the month.

“It is a shame that that Nigeria which has a large deposit of oil is facing energy crisis. It is a reflection of the kind of people we are,” he said.

The manager said that they organised training for fuel attendants on how to manage customers’ temperaments, stating that many customers are prone to aggression due to the cost of living.

Edo

In Edo State too, petrol stations are grappling with low patronage following the increase in the pump price of petrol.

In the state, most of the fuel stations sell a litre for N1,250, N1,200, N1,195, while the cheapest, which is the NNPC, sells a N1,100.

Pump attendants and managers of some of the filling stations, who spoke on the development, said the number of litres sold daily has drastically reduced.

One of the station managers, Cyril Irafidon, who works with Conoil Filling Station in Benin City, noted that many people have parked their cars while others have converted theirs to CNG.

On his part, a manager at one of the Total filling stations, Collins Eghe, said the business is no longer what it used to be as vehicle patronage has really gone down.

Anambra

The latest fuel price hike is affecting both dealers and buyers in Awka, the Anambra State capital.

Mr. Stanley Onyejikwe, manager at the Silluch filling station in Amaenyi, Awka South Local Government Area, stated that the fuel price hike has significantly impacted buyers’ purchasing power.

Concerns over declining productivity

While Nigerians are facing the reality of a deregulated petrol regime, there are concerns over its effect on the economy and the productivity of Nigerians.

Dr. Garuba Dauda, an oil and gas expert and development policy analyst, said the drop in sales will inevitably affect the economic performance because energy, which is one of the biggest drivers of any economy must be accessible and affordable.

“To realise a functional economy, its availability, accessibility and affordability must be guaranteed. At the moment, the purchasing power of citizens is very low due to its unaffordability. Amidst present economic hardship precipitated by the hike in the prices of petroleum products, it is only expected that only survival needs would pre-occupy the attention of many happy people. Hence, driving cars is not on the physiological needs of many people”, he said.

Another energy expert, Ma’aruf  Isma’il, advised the federal, state and local governments to fast track the energy transition programme.

“The implication of not having affordable fuel is much. A situation where civil servants cannot go to work because they cannot afford the transportation cost, and business people are also cutting their movements is a recipe for chaos. Productivity will be grounded.

“My advice to the governments at all levels is that they should subsidise the CNG conversion process. They should also provide the infrastructure. We cannot afford the snail speed at which some of these things are being handled. The economy will be grounded if nothing is done,” he said.

But an industry player, Tunji Oyebanji in a chat with one of our correspondents, assured that the situation would normalise. “People are adjusting, smuggling is reducing. Things will take time to settle down,” he said.

Lawyer and politician, Oba Mekunu Owolabi Salis, has urged President Bola Tinubu, institutions and individuals to make a representation for Nobel Peace Award to be conferred on former Head of State, Gen Yakubu Gowon.

 In a tribute to Gowon on his  90th birthday, he described him as one of the most effective leaders on the continent.

 He said the sense of unity with which he executed the civil war and reintegrated Igbo into Nigeria, stand him out as a great leader.

 “It is for this reason that this illustrious leader stands out as the most deserving beneficiary of the Nobel Peace Award” said the polar tourist, who made a record as the first black African to have travelled to North and South Pole.

 He described Gowon as an astute leader, who assembled a most efficient team in Tony Enahoros, Obafemi Awolowos, Aminu Kanos, among others, who were celebrated for their patriotism, efficiency and devotion to Nigeria’s greatness.

 He recalled that the tribulation and vicissitudes, which Awo encountered during the Coker Commission and the Treason trial, whether wrongly or rightly, were seen by the Yoruba stock as a persecution.

But the release of Awo from prison and opportunity given him to serve, on Gowon’s assumption of office, appeased the Yoruba and gave them a sense of national belonging.

 “This succeeded in enabling him to mobilise the Yoruba in the drive towards actualisation of the greater Nigerian dream.And when you consider this with his integration of the Igbo, you cannot but salute his acumen in political engineering and state craft, ” said the Ikorodu-born Lagosian, who, in 2019, contested for governor on the platform of AD.

 “If we also consider that Awolowo never made it as president despite his vast talent … then the opportunity offered him to serve in the Gowon administration… could be seen as a most soothing balm in compensatory atonement for whatever deprivation Awolowo, and his supporters might have suffered…’’

“In another breadth,the fore-going would undoubtedly be seen as an epic opportunity for self-fulfillment, just as it also stands as a redeeming feature in Awolowo’s trajectory of public service, because Awo would have died a completely dissatisfied man,and Nigerians would not have been availed of the opportunity of his excellent stewardship,especially his remarkable ability to manage the war-time economy effectively without Nigeria borrowing a single penny from extraneous sources”,said the Ikorodu-born High Chief.

 Narrating in the context of the Nobel laureate Wole Soyinka,Salis remarked:”Quite in keeping with his abiding conviction that a man must not offend fellow man to the extent that he departs the earth with the burden of grief of that offence carried to his grave, we would remember how Gowon caught the whole world in pleasant disbelief when he dramatically appeared at a birthday anniversary of the Ishara-born Professor of Dramatic Arts to apologize for his action in ordering his arrest and detention for close to two years on the allegation of espionage committed by him in complicity with Ojukwu during the Nigeria- Biafra civil war.

 “The philosophical attitude and exemplary equanimity with which he contended with the buffetings of fate in his private personal capacity as demonstrated in the unaffected calmness with which he received the news of the military coup against him while attending the O.A.U. summit in Uganda and the swiftness with which he was able to adjust to student life as shown in the newspapers in those days,in lavish scornful expose at an occasion when he was sighted on a queue among much younger students taking his turn for his own ration of food, in his early days as an undergraduate at the University of Warwick,coupled with the resilience with which he coped with the severe trauma arising from the jeers and stigma issuing from the spurious allegation of complicity in the infamous Dimka coup,levelled against him,will go down in history as a most inspiring demonstration of moral courage and an unshaken faith that truth shall always prevail over falsehood,just as light will always prevail over darkness at end,no matter how rough it may appear in the beginning”said the acclaimed social critic, activist and politician.

[TheNation]

The Federal Government is pressing ahead with critical tax reforms not just to boost tax revenue and efficiency but also to meet the requirements for a $750m loan from the World Bank.

This loan project is a part of the broader $2.25bn approved by the World Bank for Nigeria on June 13, 2024, to bolster Nigeria’s economic stability and support its vulnerable populations.

The other second part of the loan package was for the Nigeria Reforms for Economic Stabilisation to Enable Transformation, Development Policy Financing Programme project.

For the second loan, The PUNCH earlier reported that the Federal Government had obtained $751.88m out of the approved $1.5bn so far.

However, there has yet to be a disbursement for the first loan of $750m.

PUNCH Online observed that disbursement for the first loan is tied to specific fiscal and governance conditions under the Accelerating Resource Mobilisation Reforms programme.

The ARMOR programme includes three main result areas: implementing tax and excise reforms to increase Value-Added Tax collections and excise rates on health and environmentally friendly products; strengthening tax and customs administrations to enhance VAT compliance and audit effectiveness; and safeguarding oil and gas revenues by increasing transparency and net revenue contributions.

PUNCH Online obtained a copy of the signed loan agreement between Nigeria (through the Ministry of Finance) and the World Bank on Sunday.

The agreement document read in part, “The bank agrees to lend to the borrower the amount of $750,000,000 as such amount may be converted from time to time through a currency conversion (“Loan”), to assist in financing the programme described in Part 1 of Schedule 1 to this Agreement (“Programme”) and the project described in Part 2 of Schedule 1 to this Agreement (“Project”, and together with the Programme, hereinafter jointly referred to as the “Operation”).

“The borrower may withdraw the proceeds of the loan in accordance with Section IV of Schedule 2 to this Agreement. All withdrawals from the loan account shall be deposited by the Bank into an account specified by the Borrower and acceptable to the bank.”

According to the Disbursement Linked Indicators set out in the loan agreement, the loan will only be released upon achieving measurable progress in key areas.

These include raising VAT collection through improved regulations, increasing excise taxes on health and environmental products, and boosting corporate tax compliance through enhanced digital infrastructure.

Central to the ARMOR programme is the government’s plan to increase VAT rates and expand taxpayer compliance.

Some of the loan targets include increasing VAT collections to 1.8 per cent of non-oil Gross Domestic Product, unlocking $105m of the loan.

Also, there is a target to register 660,000 VAT filers, which will release $30m from the loan.

An e-invoicing system for VAT traders, once launched, will trigger $20m, with an additional $45m upon 30 per cent trader adoption.

In an effort to boost VAT revenue, the Federal Government is considering a bill proposing an increase in the VAT from 7.5 per cent to 10 per cent by 2025.

VAT refers to a consumption tax on goods and services levied at each stage of the supply chain where value is added.

In the executive bill seen by PUNCH Online, the legislature also intends to increase the VAT to 12.5 per cent by 2026 through 2029.

“VAT shall be charged on the value of all taxable supplies at the following rates (a) 2025 year of assessment 10 per cent; (b) 2026, 2027 2028, and 2029 years of assessment 12.5 per cent (c) 2030 year of assessment and thereafter 15 per cent,” the document reads.

Also, a copy of the Stakeholder Engagement Plan for Nigeria – Accelerating Resource Mobilisation Reforms programme dated March 2024 showed that the government is required to reintroduce the excises on telecom services, EMT levy on electronic money transfers through the Nigerian Banking System among other taxes.

Further findings by PUNCH Online also showed that one of the tax bills at the National Assembly included this excise tax.

The Federal Government has proposed a five per cent excise duty on telecommunications services, gaming, and betting activities as part of a new bill to overhaul Nigeria’s tax framework.

The bill, titled “A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions, and Instruments, and Related Matters,” was dated October 4, 2024.

An analysis of the proposed legislation showed that it seeks to introduce excise duties on services such as telecoms, gaming, gambling, lotteries, and betting provided in Nigeria.

Also, the program outlines specific allocations for technical assistance, with $5m each going to the Federal Inland Revenue Service and the Nigeria Customs Service to support their capacity to implement these new measures effectively.

This includes the development of systems for better data sharing, risk-based audits, and compliance processes, as well as substantial investments in program management and capacity building.

There will also be $10m for project management, tax policy capacity-building and other expenses.

In total, the amount makes the $20m investment financing before the release of $730m in line with fiscal targets met.

The FIRS will receive $5m to develop and implement critical initiatives aimed at enhancing its operations and revenue collection capabilities.

This funding will support the development and implementation of a robust third-party data sharing platform, along with administrative control programs to streamline operations and enhance efficiency.

Also, the FIRS will develop a VAT lottery system and an e-invoicing system, both of which rely heavily on advanced software and extensive communication planning. These systems are designed to boost VAT collections and improve compliance among taxpayers.

The funding will facilitate the creation of a risk-based audit assessment program for VAT and Corporate Income Tax, aimed at enhancing the effectiveness and efficiency of audit processes within the agency.

Similarly, the NCS will receive $5m to enhance its administrative processes and improve compliance.

This funding will be used to design and implement new administrative processes, including the establishment of sanctions for non-compliance with excise rules.

The NCS will also develop centralised control room systems equipped with backup and disaster recovery capabilities, ensuring operational continuity and resilience in case of emergencies.

Moreover, the funding will support capacity-building initiatives, enabling the NCS to effectively manage and implement these new systems and processes, ultimately leading to improved compliance and operational efficiency.

The loan also focuses on customs reforms to improve trade compliance and increase revenue.

Directing 15 per cent of cargo through the Green Channel will unlock $35m, while a compliant trader programme under the Authorized Economic Operator framework is linked to $15m.

Other loan-linked targets include reducing tax expenditures by eliminating corporate bond interest exemptions and rationalising the Pioneer Status Industry Tax Incentive scheme by the end of 2024, each unlocking $10m.

Also, excise taxes on health-related products and environmentally harmful goods will increase. A presidential order to introduce these excises will trigger $10m, with an additional $30m if revenue from green taxes reaches 0.2 per cent of non-oil GDP.

The Federal Government recently inaugurated a Joint Committee of staff of the Nigerian Investment Promotion Commission and FIRS to review the current guidelines for the administration of the PSI, validate the cost of the incentive to Nigeria, and recommend changes to the qualification and administration.

The Taiwo Oyedele-led Presidential Committee on Fiscal Policy and Tax Reforms plans to replace the abused pioneer status with priority sector incentives, rewarding companies based on their investments in the economy.

Also, in one of the executive bills, the Federal Government plans to introduce an Economic Development Incentive Certificate as a tax incentive for companies investing in capital projects.

As outlined in the bill, firms seeking the certificate must submit their applications through the Nigerian Investment Promotion Commission, accompanied by a non-refundable fee of 0.1 per cent of the capital expenditure, capped at N5m.

The NIPC will review and recommend the applications to the Minister for approval, after which the Minister may forward the recommendation to the President.

A part of the bill read, “The application shall be accompanied by a non-refundable fee of 0.1% of the qualifying capital expenditure incurred or to be incurred, subject to a maximum of N5,000,000.00 and no further fee shall be payable in respect of such application.

“The NIPC shall recommend the application to the Minister, for approval or otherwise, including the projected tax expenditure impact report in its recommendation.”

The tax bill noted that approval from the President is mandatory before the certificate is issued.

Once granted, the NIPC is required to submit an annual report detailing the sectors and companies that benefited from the scheme to the Minister, who must present the report to the President and the National Economic Council within 30 days.

[Punch]

There are indications that the local currency is set to fully reverse its gains as the depreciation trend enters a new height, hitting N1,740/$1 in the parallel market at the close of trading last weekend.

However, the Naira remained stable with minor appreciation in the Nigerian Autonomous Foreign Exchange Market, NAFEM, as dealers speculate that the Central Bank of Nigeria, CBN, would likely intervene any moment from now to curtail the pressure on the exchange rate.

Data from FMDQ showed that the indicative exchange rate for NAFEM fell to N1,600 per dollar from N1,601.2 per dollar on Thursday, indicating N1.2 appreciation for the naira.

Dealers who spoke to Financial Vanguard at the weekend said they expect the exchange rate to close this month around N1,750/$1 while 2024 may end at over N1,800/$1.

If this trend continues, by the end of the year, the local currency will have wiped out the gains it made in March this year when it suddenly appreciated massively, climbing down from an all-time high rate of N1,820/ $1 in February 2024 to N1,310/ $1 and further down to N1,240/ $1.

However, the appreciation was halted in April; subsequently, depreciation began and sustained until last week.

Year-on-year, YoY, Naira depreciated in the parallel market by 70.5 per cent to N1,705 per dollar at the close of the third quarter trading on September 30, 2024, from an average of N1,000/ $1 in September 2023.

Year-to-Date, YtD, depreciated by 16.7 per cent from N1,490/ $1 in January 2024.

The Naira recorded a massive 104% YoY depreciation in the official segment, NAFEM, to N1540.78 per dollar in September 2024 from N755.27 in September 2023. However, YoY NAFEM has recorded just 9.9 per cent depreciation to N1600/ $1 last weekend from N1,455.9/ $1 in January 2024.

Analysts and dealers have blamed the sustained depreciation of the local currency on supply shortages.

Fiscal, and monetary authorities in divergent tunes.

The monetary and fiscal policy authorities appear to be seeing the problem differently. At the last Monetary Policy Committee (MPC) meeting, the Governor of the CBN, Mr. Yemi Cardoso, who doubles as the MPC Chairman stated that members of the MPC had noticed a correlation between the period of FAAC disbursement and demand pressures in the foreign exchange market.

According to him, the apex bank will monitor future FAAC allocation disbursement to determine the impact on the FX market.

Cardoso stated: “Furthermore, members observed a strong correlation between FAAC releases and liquidity levels in the banking system as well as its impacts on the exchange rates.”

“The committee therefore agreed to increase monitoring of future releases to address its effects on price development.”

This position creates the impression that fiscal actions have been undermining the exchange rate stability with demand pressures.

However, last week in Washington DC, on the sidelines of the just concluded World Bank Group annual meetings, the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, said the problem with Nigeria’s foreign exchange market is supply and as an oil-producing nation, Nigeria could address that by significantly increasing her oil production output.

He stated: “The key about the foreign exchange market really is supply and as you know we are an oil-producing country, we just need to get our oil production up and that will deal with that issue of foreign exchange supply and pressure on foreign exchange anytime there are large flows.”

This implied that rather than demand pressure from whichever quarters, the problem is inadequate supply.

Meanwhile, forex dealers have said the acute shortage amidst demand pressures has shifted the exchange rate near the Central Bank of Nigeria’s (CBN) “fear index”, a development which they believe would compel the apex bank to launch emergency defensive measures including raising the volume of supply intervention involving all dealers to boost FX liquidity.

They also believe such a reaction from the apex bank would prevent the exchange rate from further deterioration and possibly pull it back from the fear zone.

Since August 8, the CBN has not conducted retail Dutch FX auctions it resumed in 2024 as the apex bank tinkers with a ‘minimal intervention’ approach, a behaviour some dealers believe was not unconnected with the challenges of limited forex resources available to it.

Some of the dealers told Financial Vanguard that the expected intervention from the apex bank would be complemented by a plan by the CBN to test-run its new Automated FX Trading model next month.

The model which is designed to enhance transparency and controls in the market, is planned to go live from December, ditching a nearly decade-old over-the-counter trading system in a bid to enhance transparency and remove market distortions.

According to the apex bank, the new system would “facilitate a market-driven exchange rate accessible to the public”.

In a circular released on October 02, 2024 which provided the guidelines for the new system, the CBN stated: “This development is expected to reduce speculative activities, eliminate market distortions and give the CBN improved oversight.”

The CBN said a two-week test run would be carried out in November, without specifying the exact dates.

Naira may rank worst globally
The current rate of depreciation would likely present Naira as the worst-performing currency worldwide in 2024.

The Federal Government had celebrated the sharp appreciation of the Naira in March 2024, noting that the development ranked it as one of the best-performing currencies then.

However, with the renewed depreciation trend, the World Bank, last week ranked the Naira amongst the worst-performing in sub-Sahara Africa.

Dealers comment

Commenting on the state of the parallel market, some of the dealers told Financial Vanguard about their supply and demand situation in the official market.

According to them, when big buyers fail to get supply from the official market they resort to the black market.

They also said the supply they get from some people connected in the official market may be difficult to get, a situation which makes the USDollar to be very scarce and forces the exchange rate to go up.

Mr. Liasu Moshood, a black market trader said: “The depreciation of Naira in the market is due to the rush for dollars by importers who don’t have access to the official foreign exchange market. “There is less dollar supply everywhere and not all of us come to the market now because you can hardly get dollars you want to trade.

“These importers are sourcing large amounts of dollars from our market because those Bureau De Changes cannot meet their demands. Even the banks.

On his part, Mr. Idris Daud, a trader projected the dollar to close the month at N1,750 per dollar and end the year at N1,800 threshold. “Today, the dollar is sold between N1,730 and N1,740, especially by top foreign exchange black market dealers.

“The demand pressure now is high as more organizations are trying to import goods for the festive season in December and at the same time some are trying to restock before year-end as they are not certain what the foreign exchange rate might be before the end of the year. This is another reason for the pressure.

“There is also less inflows of foreign exchange getting to our end and we end up with little supply.
“I foresee the naira closing this month at N1,750 against the dollar and in the next three months at N1,800 per dollar on the back of continued pressure on demand and supply factor.”

[Vanguard]