The Central Bank of Nigeria (CBN), has directed commercial banks in the country to allocate 60% of their foreign exchange purchases to manufacturers, in a bid to boost the ability of the real sector operators to pay for imports so as to boost the economy.
Widespread dollar shortages, caused by a fall in oil revenues, have hit manufacturers’ ability to import raw materials and spare parts, forcing many plants to close. The central bank said in a circular it wanted to encourage the production of local goods by asking banks to allocate more hard currency to industrial firms.
“Authorised dealers (banks) are hereby directed to dedicate at least 60% of their total foreign exchange purchases from all sources to end-users strictly for the purposes of importation of raw materials, plant and machinery,” the bank said in a circular dated August 22 and seen by Reuters on Tuesday.
In June, the bank abandoned its naira peg to the dollar, allowing the currency to weaken by 40 percent in a bid to attract more foreign investment.
But so far trading in the official foreign exchange market has been limited as those with dollars prefer to sell them for a higher rate on the black market.
Nigeria’s economy contracted in the first quarter and officials have said recession is likely.