Nigeria: Foreign Exchange Regulations Impacting Cross-Border Commerce, Traders Report

Traders engaged in cross-border activities have voiced concerns that the foreign exchange policies implemented by the Central Bank of Nigeria (CBN), which require the repatriation of foreign earnings, are adversely affecting trade within Africa. These grievances were shared by Nasiru Salami, the president of the Transborder Traders Association.

Salami highlighted that specific regulations are significantly obstructing transnational commerce in Nigeria. He pointed out, “Due to the foreign exchange policies, the government mandates the repatriation of proceeds from exports. This becomes a challenge, especially for small and medium enterprises (SMEs), as the policy complicates the process of repatriating export earnings, like in the case of gold exports. The requirement to convert these earnings into foreign currency and send them back to Nigeria is particularly burdensome.”

He further explained the practical difficulties traders face due to these policies. “The expectation for buyers, even those purchasing in small quantities, to transfer funds back in foreign currencies is unrealistic and poses a significant challenge for cross-border traders,” Salami elucidated.

Salami criticized the Nigerian government’s approach as overly rigid, noting that Nigeria is the only country among the 14 Economic Community of West African States (ECOWAS) members that strictly enforces this rule. He suggested that a more organized and flexible approach could benefit transborder trade significantly.

Addressing the impact of fluctuating exchange rates on cross-border trade, Salami stated, “We are anticipating the end of the month to evaluate the impact of the recent depreciation of the dollar against the naira.”

Despite restrictions on the importation of poultry products, Salami revealed that a substantial portion of livestock imported into Nigeria originates from the Niger Republic, accounting for approximately 70% of the country’s livestock imports. He shed light on the predominantly barter-based trade between Nigeria and other African nations, with Nigeria exchanging agricultural products and sometimes manufactured goods for livestock from the Niger Republic.

“Trade between Nigeria and other African countries often operates on a barter system. For instance, the Niger Republic supplies a significant share of livestock to Nigeria, in return for agricultural produce and occasionally manufactured items,” Salami concluded, emphasizing the importance of adapting policies to foster rather than hinder cross-border trade.