Thursday, February 18, 2016

Forex restriction: S’African firm quits Nigeria

Credit: nigerianreviews.com

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The current monetary policies in Nigeria are beginning to take a toll on foreign investment, including businesses being operated by other African nationals as a South African retailer, Truworths, says it is pulling out of its Nigerian business due to import restrictions.

There was also a report on Thursday that Ghana might have placed a ban on certain Nigeria-made goods from coming into its domain, following the decision of the Central Bank of Nigeria to restrict 41 items from accessing foreign exchange at its official window.

A report by Reuters quoted the Chief Executive Officer of Trusworths, Michael Mark, as saying, "We were unable to operate the stores properly because we were not able to send merchandise to the stores because there's regulation preventing that."

According to him, Truworths, which owns and operates two stores in the country, is unable to fill its shelves.

He also said the clothing retailer was struggling to pay its rents and get access to foreign exchange, which had dried up due to a collapse in oil prices. Nigeria is Africa's biggest crude exporter.

In an attempt to boost local manufacturing and prop up the ailing naira, the CBN had effectively banned the importation of almost 700 goods, ranging from rice to toothpicks, bread and soap, the report stated.

"Even non-banned items are difficult to import due to dollar shortages," it noted.

Apart from restricting dealers/producers of 41 items from accessing the foreign exchange at the official rate, the CBN also last month stopped, with immediate effect, the sale of foreign exchange to Bureaux de Change operators as part of measures to reduce the pressure on the nation's foreign reserves

The Governor of the CBN, Mr. Godwin Emefiele, who announced the policy change, said the BDCs were now to source for forex from the autonomous market.

Although he also announced that members of the public could resume transactions on their domiciliary accounts, many of such account holders have rather inundated their banks with requests to withdraw dollars and other hard currencies from their accounts.

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