Dollarization of Nigeria’s Economy Worsens As FX Usage Rise 21% Under Tinubunomics


Nigerians consumed more foreign exchange (FX) in the last quarter of 2023 compared to the preceding quarter, according to the latest Quarterly Statistical Bulletin from the Central Bank of Nigeria (CBN).

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The report revealed a 21 percent quarterly increase in the total value of foreign exchange utilised within the Nigerian economy, reaching $4.1 billion. Despite this rise, the figure marks a substantial year-on-year decline of 46 percent and is the second lowest recorded in the past eight quarters, according to FBNQuest.

The quarterly growth was largely driven by a notable rise in FX usage for invisible imports, which saw a 55 percent increase to $1.5 billion. Merchandise imports accounted for 64 percent of total FX utilisation, growing by 21 percent to $2.6 billion.

In the realm of goods imports, the industrial sector was the largest consumer of FX, utilising $1.3 billion or 51 percent of the total FX for goods, though this represents a 4 percent decline. Food product imports increased by 8 percent to $493 million, accounting for 19 percent of the total. Manufactured products followed, with imports amounting to $340 million, representing 13 percent of the total FX used for goods.

Within the invisibles segment, financial services dominated, accounting for nearly $1.5 billion, a 41 percent increase and approximately 72 percent of the total FX used by invisibles. Business services also saw a significant rise, increasing by almost 250 percent to $225 million.

The CBN’s data indicate that, excluding the uptick in Q4 2023, the overall trend of FX utilisation has been declining since Q4 2022. This trend reflects the prevailing FX liquidity challenges during that period.

Looking ahead, the CBN anticipates higher FX utilisation figures in the coming quarters, based on the relative improvement in FX access for firms and other users following the implementation of reforms aimed at enhancing market liquidity.

As Nigeria continues to navigate its FX landscape, the reforms introduced by the CBN under Tinubunomics are expected to play a critical role in stabilising and potentially increasing FX utilisation, thereby supporting various sectors of the economy.

Godwin Okafor, The Naija247news
Godwin Okafor, The Naija247news
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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