Nigeria’s hard-currency shortage is forcing companies to get creative in their hunt for dollars. For many, including Dangote Cement Plc, that’s meant a bigger focus on exports.
The continent’s largest producer of the building material has about 1,500 trucks hauling cement across the border to Benin, Ghana and Chad to access hard currency, Chief Executive Officer Onne Van Der Weijde said in an interview. Diageo Plc’s Nigerian unit said it was considering shipping products including Guinness stout to South Africa, while imported clothing entrepreneur Chris Aniagolu is talking to local factories about bulk purchases of shoes he’ll export to other West African countries.
Companies in Nigeria are struggling after the decline in oil prices cut government revenue and caused a shortage of foreign currency, causing the economy to shrink last year for the first time since 1991. The central bank has also blocked importers of 41 selected goods including textiles from the interbank foreign-currency market. The lack of dollars has forced businesses like Aniagolu’s to buy foreign currency on the black market at about 25 percent more than the official rate.
The dollar squeeze has been exacerbated by the central bank opting to keep a tight grip on the naira’s value. Investors say the bank has held it at around 315 against the dollar on the official market since August, even as the black market rate tumbled to 380.
It makes sense that companies are trying to export more to reduce their dollar needs from the interbank foreign exchange market, Sugun Ajayi-Kadir, director general of Manufacturers Association of Nigeria, said.
“It’s a difficult situation where you have nothing to export, or you can export very little, whereas your dollar need is big,” he said.